No appeal on Vodafone, Shell rulings, hints Finance minister Arun Jaitley

Finance minister Arun Jaitley on Saturday indicated that the government was unlikely to appeal against court orders quelling a government decision to tax sale of shares of Vodafone and Shell in offshore transactions. The finance minister also said that a breakthrough in the Goods and Services Tax (GST) impasse was in the offing with the government calling a meeting of the empowered committee next week to facilitate a constitutional amendment allowing for the introduction of the law in the winter session.

Delivering the keynote address at the 2014 edition of The Economic Times Awards for Corporate Excellence, Jaitley said that the government was working on a detailed plan to introduce an appropriate tax regime, better infrastructure and competitive interest rates to ensure that its ambitious "Make in India"programme succeeds, besides making these manufacturing zones competitive and cost effective. Emphasizing on the reforms that the government wants to introduce, he told a group of India's biggest industry leaders that an ordinance on the coal block allocation was due next week and the government would come out with a similar transparent mechanism for mining of other minerals which would remove all subjectivity in the allocation process.

Criticizing the UPA government for its attempt to tax transfer pricing deals retrospectively, Jaitley said taxes that are payable can be collected, but taxes which are not payable cannot be compulsorily extracted. "We have a fair judicial system, there are redressal mechanisms, there are tribunals and there are international tribunals. The kind of taxation regime which scared investors away and has not resulted in the exchequer getting a single rupee are stuck in legislation where the government is unlikely to succeed. They eventually ended in only giving us a bad name as an investment decision."

Should the government not appeal against the Shell and Vodafone verdicts several other multinationals in India would also stand to gain. Companies such as IBM, Nokia, Cairn India and Leighton India are facing similar demands from tax authorities. He also assured tax payers that there would not be any harassment for them going forward.

Stressing on land acquisition as another requisite for reform, the finance minister said that present laws were flawed and needed a fresh look. "I have been working on the land law along with others in the government. I came across a curious provision which said that no land acquired under the law can ever be used for a private educational institution, private hospital or a hotel," said Jaitley. The finance minister said that the myriad restrictions on land acquisition were applicable not only to the private sector but even to defence. So even for acquiring land for a cantonment or a seaport it was difficult... "Should we or should we not look at this very important law," Jaitley asked.

Capturing the improved sentiments in the economy, Vineet Jain, MD, BCCL, in his inaugural address, said that in the first six months prime minister Narendara Modi has raised spirits and wowed investors. "The gloom of the last few years is a distant memory. The finance minister has introduced number of reforms in coal mining, labour and ease of doing business. But Yeh dil maange more", he said.