Retrospective Tax: Vodafone, Cairn raise concerns over terms
Cairn has asked to remove the clause that states the interested parties are required not to seek claims after disputes are resolved.
As per the proposed terms of the settlement for the retrospective taxes, both Cairn Energy and Vodafone need to issue a declaration that both the companies will not contend for any claims after the resolution of the disputes. However both the companies have raised concerns over this condition, according to a report in The Economic Times. Earlier CBDT had issued draft rules wherein both the companies shared this feedback. Cairn has asked to remove the clause that states the interested parties are required not to seek claims after disputes are resolved. As per the report, the clause makes only the companies responsible for settlement.
The report quoted a Cairn Energy spokesperson who said that the company is engaged in productive and cordial ongoing discussions with the government of India. The company aims to close the matter through a transparent and open system.
In the case of Vodafone, it was observed that a waiver on claims by existing and future shareholders will be difficult for an entity to provide.
Quoting someone aware of the development and company’s sentiment, the report questioned the clause’s implications on mergers and investments that will happen in the future. The individual said, “How can any company go ahead and do business with others saying they have to sign this clause — that too after years of investing in the sector and the country.”
On August 28, the Centre had released the draft rules for settling retrospective cases. It gave time until September 4, to stakeholders to respond to the draft rules.