Voda case paves way for cos in retro tax net: Porus Kaka

The government's acceptance of Vodafone's conciliation offer in reference to tax liability case could pay way for many such other companies which are caught in retrospective amendment net, Sanofi’s Senior Advocate And Lead Counsel Porus Kaka told CNBC-TV18 in an interview today.

"If the solution is found in the Vodafone case, then that can be put up as solution across the board for all types of transactions that are caught in the retrospective part of the law," Kaka said.
However he added that if there is no negotiation leading to a settlement, then the litigation will continue.
The Cabinet today accepted Vodafone's conciliation offer under part III of the Arbitration and Conciliation Act, instead under the United Nations Commission on International Trade Law (UNCITRAL) rules as proposed by the telecom company. Below is the verbatim transcript of his interview.  Q: What do you make of what we have heard from the finance minister, what do you make of the fact that the conciliation process with Vodafone – whether or not Vodafone accepts it or not is a different story. What do you make of the developments of the day and what does this mean for other Vodafone like transactions?
A: There is currently no framework that we are looking at. So, the government is looking to find out if there is a solution that they can find with Vodafone. If they find that solution then the legal framework would be sought to be put in place by way of going back to cabinet and then to parliament. So, we are really looking at kind of a chicken and egg story where you first want to find a solution, and then you want to find legal strata for putting the solution in place. This is an extremely uncharted, it is still a good thing, because for the first time I think we have a top government part realising and recognising that perhaps the retrospective amendments were not good. But it should not be ultimately done as a Vodafone single solution. That will be challenged in the court and in my opinion that would not even be good for Vodafone. If the solution is found then whether that can be put as across the board solution for all types of transactions that are caught in the retrospective part of the law. Q: Let me quote to you the Prime Ministers office comments on this matter. On March 15 the prime ministers office (PMO) said that the department may consider amending the I-T Act to remove the retrospective nature of the amendment, make the amendment prospective from the last year when the amendment was introduced. This amendment would also be in accordance with Shome committees recommendations. Is that perhaps not the best way forward? Will this government have the political will and the political courage to go as far as that?
A: Having gone down today's route I don’t think they are merely going to wave their hands and remove the retrospective part. If there is no negotiation leading to a settlement I fear the litigation will continue. There is no doubt there is a view in PMOs office that retrospective amendments were not good and that is something which everybody perhaps most people agree with that it affected the rule of law. But I think what the current position is, first find a solution – whether its taxed, partly taxed, then come to the cabinet and then make the amendments. So, you have solution, legislation and then to prevent further court cases. We are a long way away from the final outcome. If it is a single point solution - for only one client, it is extremely risky both for the country and for the litigant also. Q: The world is watching. You are probably watching this development very closely as far as Shantha and Sanofi is concerned. What do you take away from this?
A: Today I would still say it’s good because we have recognised that perhaps the hasty retrospective amendments were not good for rule of law. So, I would still view today at the end of the day as positive. I come back to what you said, is that if ultimately we give up this retrospective act that we are used to, that would itself be a positive thing going forward for all Indians and those who invest in India.