27 March 2015 13:15:16 IST

No move towards retro tax; Cairn is legacy issue: Jaitley

Cairn India employees work at a storage facility for crude oil at Mangala oil field at Barmer in Rajasthan. Cairn India is a unit of UK-based Cairn Energy Plc

Huge amount of enthusiasm about India among investors, says Finance Minister

The Modi government has stuck to the promises it had made about not moving in the direction of retrospective legislation on tax issues, Finance Minister Arun Jaitley said during a trip to London, referring to the latest developments at Cairn as a “legacy issue”.

Jaitley said when it came to fresh notices or action, any assessing officer who wanted to take such action would have to have the clearance of the Central Board of Direct Taxes, and with legacy claims and notices that had been initiated by the previous government, they had to be sorted out through a due judicial process.

“We have stuck to our word,” he said. “For any assessee — if he has any grievance against the legacy issues of the previous government they have had the due process to resort to.” He also pointed to the fact that in situations where a judicial process had decided an issue, the government had chosen not to challenge it.

On Friday, Cairn India said it had received an order from the Income Tax Department seeking ₹20,495 crore for allegedly failing to deduct withholding tax on purported capital gains made in 2006-07 to its former parent, Cairn UK Holdings Ltd. Earlier in the week, Cairn Energy announced it was filing a notice of dispute under the UK-India Bilateral Investment Treaty, after receiving a “disappointing” assessment from the Income Tax Department, hitting out at the government’s handling of the matter.

During a brief visit to London, pegged around the unveiling of the statue of Mahatma Gandhi on Parliament Square on Saturday, Jaitley met British Prime Minister David Cameron as well as Chancellor of the Exchequer George Osborne. He held a number of meetings with investors in the city of London, at JP Morgan and the London Stock Exchange.

Discussions had not been overshadowed by the latest developments over Cairn, he said. “There is a huge amount of enthusiasm about India – India is back on the radar of investors,” he told a press conference. Questions from investors had centred round two themes he said — “whether you are able to incrementally move in the direction you promised or are you taking any movements in a contrarian direction. We are moving consistently in one direction. The second is whether obstructionism is able to halt you and whether you are able to overcome it – so far we surely have been able to overcome it.”

In a public speech to a large group of investors hosted by the UK India Business Council and FICCI on Friday, Jaitley defended the government’s land acquisition programme, insisting that contrary to the previous government’s position, the changes introduced by the BJP government were pro people and would catalyse rural development.

“The previous government had made land acquisition impossible,” he said. Criticising the track record of the previous government he said, “Instead of concentrating on high growth we thought the reallocation of existing resources was enough.”

Brushing aside concerns about the impact of potential rises in the oil price on the Indian economy, he said that the country was on track to grow 7.4 per cent growth this year and is expected to grow by 8 per cent next year.