British Foreign Secretary Philip Hammond raised the issue of the Rs 10,247-crore tax notice slapped on UK oil explorer Cairn Energy by the income tax (I-T) department with Union Finance Minister Arun Jaitley in the national capital on Thursday.
Hammond, who is here on a two-day visit, said that Jaitley explained that the Cairn case was started by the previous government and the new government is powerless to stop it. "The tax demand made to Cairn was very unwelcome," he said after talks with Jaitley.
"I've had a very clear indication from Mr. Jaitley... who is clear and categoric that this government will not be issuing any further notices under the retrospective tax legislation," Hammond told the media. He also advocated scrapping of retrospective tax demands to make India an attractive investment destination.
Jaitley's pledge not to use legislation to issue new tax notices does not stop courts from pursuing cases which began under the previous administration. "There are legacy cases that are going to have be dealt with in courts," Hammond said.
Noting that business hates restrospectivity because that means business cannot plan, Hammond said that he suggested to Jaitley that he should make it loud and clear during his UK visit, which starts on Friday, that the government will not issue any fresh notices on retrospective tax. Jaitley is likely to face queries over the tax demand when he meets investors in London. He is likely to explain the government's stance on the use of retrospective tax law. "It would be a good idea if he could make that message loud and clearly in London tomorrow at investors conference," Hammond said.
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