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Business News/ News / India/  India notifies final rules for settling Cairn Energy, Vodafone tax cases
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India notifies final rules for settling Cairn Energy, Vodafone tax cases

Given that there was public and industry consultation at the drafting stage, the final rules could set the stage for settlement of the protracted legal battles India had with companies like Cairn Energy and Vodafone

The Vodafone tax dispute pertains to a Rs11,000 crore retrospective tax demand by India in relation to the Vodafone Group Plc’s $11 billion deal for acquiring a stake in Hutchinson Telecom, which held the group’s Indian assets. Photo: ReutersPremium
The Vodafone tax dispute pertains to a Rs11,000 crore retrospective tax demand by India in relation to the Vodafone Group Plc’s $11 billion deal for acquiring a stake in Hutchinson Telecom, which held the group’s Indian assets. Photo: Reuters

NEW DELHI: The Centre on Saturday notified ground rules for settling 17 tax disputes with multinational companies like Cairn Energy Plc. and Vodafone Plc. that involved use of an anti-abuse provision introduced in tax laws in 2012 on past transactions.

The Income-tax (31st Amendment) Rules, 2021, that sets the conditions for settlement of these cases takes effect from 1 October, showed an official notification published on Saturday.

The rules are the result of a public consultation by the government, and elaborate on the conditions added to the Income Tax Act earlier this year, by way of an amendment, to settle these cases. The rules explain the manner in which businesses have to meet conditions specified in the Income Tax Act such as withdrawal of appeals and arbitration and waiving off rights to pursue claims and remedies. The tax department will drop demands or claims raised in these cases and refund amounts collected subject to the companies meeting conditions as specified in the rules.

“The declarant and all the interested parties shall irrevocably withdraw, terminate or discontinue all the appeals or applications or petitions or proceedings, against the relevant order or orders and furnish evidence thereof and a declaration in the undertaking in Form No. 1 to the effect that it shall not, under any circumstances, reopen or file any such appeal, application, petition or proceeding in future against the relevant order or orders," the rules said.

Given that there was public and industry consultation at the drafting stage, the final rules could set the stage for settlement of the protracted legal battles India had with companies like Cairn Energy and Vodafone.

Emails sent to Cairn Energy and Vodafone on Saturday remained unanswered at the time of publishing.

Cairn Energy had said in September that it was considering entering into statutory undertakings with the Indian government regarding retrospective tax claims, which would fetch the British explorer tax refunds totalling Rs79 billion or $1.06bn.

The company finds the proposed settlement of the tax litigation as a highlight of its 2021 outlook, which will enable it to expand its producing asset base as well as to return to shareholders by way of dividend and buy back, Mint had reported on 7 September.

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ABOUT THE AUTHOR
Gireesh Chandra Prasad
Gireesh has over 22 years of experience in business journalism covering diverse aspects of the economy, including finance, taxation, energy, aviation, corporate and bankruptcy laws, accounting and auditing.
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Published: 02 Oct 2021, 02:30 PM IST
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