Former Union Finance Minister and senior Congress leader P. Chidambaram on Friday welcomed the government’s move to amend the taxation laws and nullify the provisions for retrospective taxation.
However, a tweet of Congress’s Lok Sabha member Manish Tewari on the issue exposed the fault lines within the party.
“On the withdrawal of the Retrospective Tax (Vodafone), I am glad that we have put an end to an issue that has been troubling us for 8 years,” Mr. Chidambaram tweeted moments after the Lok Sabha passed the Bill with a voice vote.
On Thursday, Finance Minister Nirmala Sitharaman introduced the Taxation Laws (Amendment) Bill, 2021 that will allow the government to drop any tax demands made on any transaction before May 2012 or return any tax already collected but without any interest payments.
Taking to Twitter, Mr. Tewari said, “Because NDA/BJP made a complete hash of defending its case qua @CairnEnergy in arbitral tribunal does not mean you give up sovereign right to Tax retrospectively. @CitiznMukherjee , @PChidambaram_IN , @arunjaitley never compromised India’s sovereignty.”
The retrospective clause was brought in by the late Pranab Mukherjee as the Finance Minister after the Supreme Court, in an order, held that Vodafone couldn’t be taxed for a 2007 transaction involving its acquisition of 67 % stake in Hutchinson Whampoa for $11 billion.
Subsequently, the same provision were against Cairns Energy for a 2006-07 corporate restructuring. The move was challenged by Cairn and recently, a Paris court allowed them to freeze 20 Indian properties worth $23 million. In this backdrop, the Bill may be interpreted as a corrective step towards dispute resolution.
