Retro amendment to stay; Vodafone must pay: FM

“The Constitution has given the Supreme Court the power to interpret the law. But this does not take away Parliament’s right to amend or assert the law. Parliament can make amendments to law to correct the Supreme Court’s judgments,” Mukherjee asserted.

Following over three years of litigation between the Indian tax authorities and Vodafone,the Supreme Court in January this year had ruled that the Vodafone-Hutchison deal is not taxable in India. It had subsequently also dismissed a special leave petition filed by the government on the case. But Mukherjee’s stance would mean that while the British telecom firm may have won the Rs 11,000 crore tax case,the government can still start proceedings to recover the tax with the passage of the Finance Bill,2012.

Trying to placate worried investors,Mukherjee had yesterday informed the Lok Sabha that that cases where assessment orders have been finalised would not be opened and the Central Board of Direct Taxes (CBDT) would also issue a detailed circular on this.

Stressing that India is not a tax haven,the minister said,“I would like to be guided by either Double Taxation Avoidance Agreement,or tax,” the finance minister said.

“There can’t be a situation somebody will make money on an asset located in India and will not pay tax either to India or to the country of its origin,” the minister said in his hour-long reply to the debate.

Mukherjee also pointed to the United Kingdom,where Vodafone is headquartered,and which has also passed legislations with retrospective effect. He said in a similar vein the proposed amendment by his government was merely “clarificatory” in nature. “India is not an inferior country compared to any other,” he said.

Following Mukherjee’s reply,the Lok Sabha passed the Finance Bill,2012,by voice vote. The Bill will now be taken up by the Rajya Sabha for discussion.

On the deferment of the implementation of the General Anti-Avoidance Rules (GAAR),Mukherjee said his move was not a result of “fear or apprehension”. A Left motion was defeated in the Lok Sabha 342 to 22,with the BJP backing the government. The government accepted a BJP suggestion that it bring an amendment to give effect to Mukherjee’s deferral of GAAR till 2013.

‘White paper on black money by Session-end’

Finance minister Pranab Mukherjee on Wednesday said that while a white paper on black money will be unveiled in Parliament by the end of the current Session,the three institutions assessing the estimates of such funds are expected to submit their report by July-August.

“A white paper with other information will be made available to members of the House. It is in the final stages of drafting,” Mukherjee said while replying to debate on the Finance Bill,2012.

ENS