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Tax wavers worth Euro 143.7mn to Anil’s RCom: A Favour?
Commentary

Tax wavers worth Euro 143.7mn to Anil’s RCom: A Favour?

K. Gopalakrishnan

With facts on Rafale surfacing at regular intervals and denials, the truth about the French aircraft deal is yet not known. Every document published by the media raises many questions embarrassing to the Modi government. Every explanation raises more questions which go unanswered. For, answers are on a selective basis, comfortable to the authorities. To move towards the truth one needs all the answers and total transparency. Transparency has not been the strong point of Modi government unfortunately, disappointing the supporters who expected an open government. Whatever came before the public domain was originated from French sources and investigative reports by N. Ram, who had decades ago brought out facts on Bofors which ultimately led to the JPC investigation and electoral debacle of late Rajiv Gandhi.

We have a mountain of facts, fiction and deeply buried truth. Modi government has all along tried to hide facts and take refuge under Official Secrets Act and National Security. Published documents were described as stolen papers, which revealed facts which did not speak highly of the “clean” Modi government. The crux of the matter is the allegation that Anil Ambani’s Reliance Communications were benefitted to the tune of Rs.30,000 crores in the Rafale deal in a Quid Pro Quo between the governments of France and India. Thanks to the highly admirable, bold and just position taken by the Supreme Court the matter is before the apex court. Since the issue is under judicial scrutiny, let’s wait for the verdict.

Meanwhile another alleged favouritism revealed by a leading French paper, Le Monde, has hit the headlines, highly embarrassing to the Modi government known for its clean and honest pretensions. Reliance Communications too is put in an uncomfortable and difficult situation. Reacting to the news report, Reliance Communications owned by Anil Ambani, has denied any favouritism or gain from settlement. According to the company, French tax authorities had raised a tax demand of over Rs.1,100 crore. As per the French law settlement, a mutual settlement agreement was signed to pay Rs.6 crores as a final settlement, was the explanation from R Com.

Unfortunately for R Com the atmosphere in the nation is that of suspicion in the case of Rafale deal. Even if the company had negotiated a deal through normal channels, questions are raised given the background of the defence deal and Anil Amban’s defence firm becoming the offset partner manufacturers of Rafale aircraft replacing the public sector HAL agreed upon by the French and Indian government during UPA rule. Statements attributed to some very senior functionaries of France did hint at the interest of Narendra Modi for such a change, apart from many other matters now before the highest court of India.

In the present case, the company concerned is Reliance FLAG Atlantic France SAS, a subsidiary of Reliance Communications India, and owns a terrestrial cable network and other telecom infrastructure in France. According to reports the company was investigated by French Tax Authorities and found liable to pay Euro 60mn between 2007 and 2010.

On its part Reliance offered to pay Euro 7.6 mn but the French authorities rejected the offer and an additional tax of Euro 91 mn was levied for the period 2010 to 2012. The tax liability was at least Euro 151 mn by 2015.

According to Le Monde report, France has cancelled a tax recovery of an amount of 143.7 mn, claimed for years, in favour of a French company belonging to the Reliance Group of Commmunications. The dispute was settled in 2015, at a time when India and France were negotiating the sale of 36 combat aircraft.

These facts are accepted by all. Added to that is when the French Tax Authority found the Reliance company liable to pay Euro 60mn between 2007 and 2010 UPA was ruling India when the proposal for buying Rafale combat aircrafts was before the union government. In 2015 when the huge tax concessions were allowed by French authorities the Rafale deal was in the final stages. The deal was negotiated by the Defence ministry and PMO according to published reports. Reliance’s case is that the tax liability was reduced as per normal negotiations and there was no favouritism or gain from the settlement.

Defence ministry too has taken a stand similar to that of the Reliance when it made clear that any connection drawn between the tax issue and the Rafale matter was totally inaccurate, tendentious “and is a mischief attempt to disinform”.

However what made the French authorities change its head and heart in the case of tax liability of Reliance since 2007 to 2015 and decide to give huge tax concessions? The French government was firm on imposing the tax liability for almost eight years. On revenue issues, the French government is rather firm. Only a few years back it took a rigid stand on tax concessions even when faced with a mass agitation.

The only reason, many believe, is that the French authorities were keen on the deal since the beginning of the century and negotiations were on for over a decade. Compared to the Rafale deal the concessions given to Reliance were a small amount. It appears in the negotiations, the approach was give and take to make the deal mutually acceptable.

At the same time there is no reason to disbelieve the version of Reliance and Defence ministry.

This is classic case of having all the facts and not the truth. The question is whether the huge tax waiver is a favour to Anil Ambani’s R Com. If so, what made the French authorities relent after taking a firm stand for eight years to impose the tax liability on Reliance. Only an impartial enquiry can bring out the truth. Undoubtedly on such an issue the public should know the truth not just facts and fiction. One should be fair to Anil Ambani too. If he is innocent, the public should know that too. Such matters should not be left in the realm of speculation in a civilized society.