The Government will have to pay Rs 8,000 crore to four companies including Cairn Energy, Vodafone, WNS Capital and one more, once the Taxation Laws (Amendment) Bill, 2021 becomes law, says JB Mohapatra, Central Board of Direct Taxes (CBDT) Chairperson. The Bill is set to do away with the retrospective tax provision and end all retrospective taxes imposed on indirect transfer of Indian assets made before May 28, 2012.
Mohapatra told ANI in an interview that in total, in excess of Rs 8,000 crores will be paid out of way of refund and the refund will be without any interest. “The statement of the Finance Minister says about 17 cases, in which four cases where demands have been paid as a part and those are the four cases where demands have been paid. There are other 13 cases where demands have been raised, but they have not yet been discovered,” he said. “So it will be a simple refund to be given by the Income Tax department for the payments they have made, they will refunded in terms of the amendment which has been brought through as and when it is passed, and given assent by the President and becomes law.”
The Chairperson said that they are trying to end the litigation; the Bill is passed in the Rajya Sabha. “Now, it will come back to the Lok Sabha for confirmation, after that it will go to the Ministry of Law and then it will be notified. We will have the new law by early next week.” He said this has been one of the pain points for the department for a long time. “In 2012, this bill came into the Act. It had its own history. Already, prospectively in tax law is not bad per se. There has always been this retrospectively. If you remember the history of section 14A, which came in 2001-02 was amended within two years by issuing a circular, and then also writing down the rules of section 14A by the rule 8 in 2008, but if you come to section 37, it was amended in Finance Act 1998 which was in response to a particular decision of Bombay Tribunal in the case of Pranab Construction, where the Tribunal took a view that the legal payments made to the gangs operative in Bombay building circle, payments made by builders to the goons and anti-social elements, they also could be eligible for tax deduction.”
Mohapatra highlighted that the same was done in the case of Section 9 in the Vodafone case. “In the Vodafone case, after the amendment, which was brought in 2012, it was long felt that decisions by the companies made prior to 2012 should not be adversely hit by the same provisions. So retrospectively, it was reconsidered and the law that was framed in 2012, which was not wrong.”
He said it has been reconsidered very positively by the Government of India through the amendment.