The Ministry of Finance will now be able to settle the tax dispute with Vodafone as it has notified a further relaxation of the validation rules.
The Vodafone case of retrospective taxation is different from that of Cairn and other cases. While the telecommunications major had been faced with the validation of a tax request under article 119 introduced in the 2012 finance law, in the case of Cairn et al., The tax requests were issued after the amendment 2012 under Article 9 on Indirect Transfer of Indian Assets. With this in mind, separate rules were needed for Vodafone.
Meanwhile, there is no change in the basic structure of the rules notified now and the set of rules notified on October 1 under the new law burying retroactive taxation. There will be conditions requiring the companies concerned to irrevocably withdraw, discontinue and refrain from pursuing legal proceedings, arbitration, conciliation or mediation, whether in India or abroad. They will have to withdraw the enforcement or continuation proceedings of the seizure in respect of any award against the Republic and / or all Indian subsidiaries. While two conditions relate to a structure to deal with possible disputes in the future, the last condition concerns the public declaration.
The company concerned will also have to publish a public notice or a press release to inform that the complaints no longer subsist and to indemnify any possible complaints.
For the whole mechanism, a new sub-part “J” and the rules “11UE and 11UF” have been inserted in the income tax rules of 1962. The title of the sub-part is “Indirect transfer before May 28, 2012 of assets located in India ‘. There are four forms and an annex to give effect to the change made by the 2021 finance law.
The interested company will have to submit the commitment in Form 1 within 45 days from the date of entry into force of the rules, which is October 1. After that, the tax administration will have 15 days to place an order and issue a certificate in Form 2 From the date of receipt of this form, the entity concerned will have a period of two months to collect the (s ) dispute (s) and inform the Department using form 3. that the formal notice orders will be deemed never to have been placed. This order will engage the Assessing Officer (AO), who will revoke the attachment (if applicable) and issue a refund within 15 days.
The new Finance Act amended the Income Tax Act 1961 and the 2012 Finance Act to ensure that any request for indirect transfer of Indian assets abroad made before May 28, 2012 will be rescinded under subject to certain conditions such as withdrawal of disputes. Once these conditions are met, the government will refund the amount of tax paid by businesses.
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