Govt seeks to delay Castleton hearing by 4 weeks

The Castleton case, which assumes high importance in view of the Justice AP Shah-led committee report on MAT, will not come up for hearing next week, Attorney General Mukul Rohatgi has confirmed to CNBC-TV18. Last Friday the government-appointed Justice AP Shah-led committee had submitted its report on whether Minimum Alternate Tax (MAT) should apply to foreign companies including foreign portfolio investors (FPIs). It is now learnt that  the government will seek more time on the recommendations of the report and have sought to delay Castleton hearing by four weeks. Menaka Doshi reports:Castleton case which was to be heard next week on August 4-5, have got postponed because the government seeks some more time to formulate its position based on what the AP Shah Committee has recommended. The Castleton case is the pivotal case in this entire issue of foreign portfolio investment (FPI) and minimum alternate tax (MAT), essentially because Castleton was the foreign company in the case of which the Advanced Ruling Authority has suggested that MAT would apply even though the fact is that in the case of Castleton, and this is the story that will play out in the Supreme Court as well, the government had never in fact even insisted when the case was going on at the advanced ruling, that MAT ought to apply. So, it was entirely the discretion of the judge, who is a former retired Supreme Court Judge, heading the Authority for Advance Rulings (AAR) at that time. He insisted that MAT ought to apply even though the government had not made that plea. And anyway, since Castleton came through the Mauritius route, it would have been able to avail of treaty benefits. That is a position that the government did not argue against at the AAR and that is the position that the AAR had also sort of accepted. So, in some sense while the Castelton case has become the pivotal case, it may not really answer all our questions with regards to the FPI-MAT issue. Those questions can only be answered by the government’s position which now seems to, if at all, change because AP Shah Committee submitted it report to the government last week. There are two curious views emerging from here. The AP Shah Committee was set up by the government in an effort to offer some clarity on this matter. Unfortunately, the government has not chosen to make the committee report public so nobody knows what it has recommended. It seems the government now wants to buy some time to formulate a new position based on the report. Hence, the Castleton matter have got pushed by another four weeks. Sources say there was suppose to be a big weekend meeting amongst all those involved in case directly and those FII associations or FPI associations that wanted to intervene in the matter. That weekend meeting was also called off in light the government seeking an extension.