Retro tax: Tata Group, Sanofi Aventis among five firms looking to end litigation, arbitration with Centre - Economic Times

A clutch of large companies, including Sanofi Aventis, Mitsui & Co, WNS, Genpact and the Tata Group, are looking to settle lawsuits or arbitration proceedings against the government after it recently moved to nullify a 2012 retrospective tax amendment.

This follows a similar approach by Vodafone and Cairn Energy, which have been fighting high-profile cases contesting the government’s cumulative backdated tax claims of as much as ₹13,000 crore.

About 17 companies are involved in legal wrangles at various levels and about half a dozen are ready to

up the government’s offer to settle the tax disputes, industry insiders told ET.
The government has promised to refund taxes already collected and withdraw from legal or arbitration matters, if the companies stand down and let go of claims for damages, interest or other costs. It has, however, not yet put in place clear rules for such settlements.

The companies have initiated steps to meet with officials, the sources said, adding that they have reached out to legal and tax advisors in the country to resolve the issue at the earliest.

‘Mechanism may Differ’
Sanofi, Mitsui, WNS, Genpact and the Tata Group did not respond to ET’s emails till the time of going to press on Friday.

Tax experts said the settlement mechanism may differ depending on the specifics of each case.

Companies are seeking clarity on how the new law will work, whether it would impact other prospective litigations and tax demands arising from indirect transfer of shares, as well as the timeline for refunds that the government has promised.

"For most companies, it would make sense to settle legacy tax issues as that would give them certainty," said Girish Vanvari, founder of tax advisory firm Transaction Square. "The most important thing right now is for companies to look into the rules around the settlement and the refund schedule."

Companies that had undertaken mergers, acquisitions or restructuring have faced retrospective tax claims in India, with the government arguing that most of the valuation (more than 50%) of the assets or companies that were sold came from India or Indian customers. So, it had said, even if a deal was between two foreign companies or holding entities, taxes were to be paid in the country.

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Retro tax: Tata Group, Sanofi Aventis among five firms looking to end litigation, arbitration with Centre - Economic Times
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