May ask Mum­bai court to is­sue non-bail­able war­rant or sum­mons

The Economic Times - - Front Page -

Rahul Tri­pathi & Di­pan­jan Roy Chaud­hury

New Delhi: The En­force­ment Direc­torate is di­vided over its next steps and is weigh­ing its op­tions af­ter Vi­jay Mallya ig­nored three sum­mons to ap­pear be­fore the agency, and is pre­par­ing a fool­proof case for seek­ing re­vo­ca­tion of his diplo­matic pass­port.

ED, which wants to ques­tion Mallya in con­nec­tion with loans given to King­fisher Air­lines, is con­tem­plat­ing ask­ing the Mum­bai court to is­sue a non-bail­able war­rant against him or is­sue sum­mons to en­sure his pres­ence in court. The agency has sought le­gal opin­ion on the mat­ter and may ap­proach the Mum­bai court in the next cou­ple of days, a govern­ment of­fi­cial told ET. The de­vel­op­ment comes a day af­ter ED wrote to the min­istry of ex­ter­nal af­fairs to re­voke Mallya’s diplo­matic pass­port. This time the agency is be­ing care­ful be­cause it wants to avoid a re­peat of the Lalit Modi case, when a court over­turned MEA’s re­vo­ca­tion of the for­mer In­dian Premier League com­mis­sioner’s pass­port.

Mallya, who is wanted for ques­tion­ing in con­nec­tion with .₹ 900 crore of loans taken from a con­sor­tium of banks led by IDBI Bank, left for the UK on March 2.

The tele­com firms had said this amounted to ret­ro­spec­tive tax­a­tion as it was also ap­pli­ca­ble on de­ferred pay­ments of spec­trum pur­chased be­fore April 1.

“Ser­vice tax is payable on such pay­ments… How­ever, the same have been specif­i­cally ex­empted,” the CBEC com­mu­ni­ca­tion said. This will en­sure there is no new tax li­a­bil­ity on tele­com ser­vice providers in re­spect of ser­vices pro­vided in the past. “This ad­dresses con­cerns of tele­com providers,” a govern­ment of­fi­cial told ET.

Tel­cos have the op­tion of mak­ing full pay­ment up­front or in in­stal­ments for air­waves ac­quired at auc­tions. There was lack of clar­ity re­gard­ing when the li­a­bil­ity to pay ser­vice tax would arise where the com­pany chooses to pay in in­stal­ments un­der the de­ferred pay­ment op­tion over a pe­riod of 10 years. There was con­cern the move on ser­vice tax would jeop­ar­dise spec­trum buy­ers’ fi­nances since this li­a­bil­ity had not been taken into ac­count prior to bid­ding.

“The ex­emp­tion to as­sign­ment of right to use spec­trum for spec­trum as­signed to the tele­com com­pa­nies prior to April 1will pre­vent any ret­ro­spec­tive tax­a­tion,” said Bipin Sapra, part­ner, EY. Sapra said the govern­ment had pre­vented ef­fec­tive loss of credit to the tele­com com­pa­nies by al­low­ing the cre- dit of ser­vice tax on such spec­trum charges to be de­ferred to only three years as against the to­tal pe­riod of as­sign­ment as pro­posed in the Fi­nance Act. But the in­dus­try wants the pe­riod fur­ther cut to two years.

“We are very grate­ful to the fi­nance min­is­ter for ad­dress­ing our con­cerns and for per­mit­ting us to take the off­set in the third year rather than the end of 20 years,” said Ra­jan Mathews, di­rec­tor-gen­eral of Cel­lu­lar Op­er­a­tors As­so­ci­a­tion of In­dia (COAI). “How­ever, we would fur­ther re­quest the govern­ment to bring it down to two years in con­form­ity with the off­set granted to cap­i­tal as­sets. Se­condly, we have also re­quested for clar­i­fi­ca­tion on whether the in­ter­est com­po­nent of the de­ferred pay­ment will also at­tract the ser­vice tax, when one fi­nances through the de­part­ment of tele­com.” The CBEC has also is­sued a list of ex­empted govern­ment ser­vices to pro­vide clar­ity on the im­po­si­tion of tax at15%, in­clud­ing two cesses. Right of way, li­cence fees and de­vel­op­ment rights will at­tract ser­vice tax. The Fi­nance Act 2015 made an en­abling pro­vi­sion to ex­clude all ser­vices pro­vided by the govern­ment or lo­cal au­thor­i­ties to a busi­ness en­tity from the neg­a­tive list. Th­ese ser­vices will now be­come taxable. The pro­vi­sion, how­ever, does not cover govern­ment ser­vices pro­vided to in­di­vid­u­als.

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