The Ministry of Defence (MoD) clarified on Saturday that connections drawn between a tax waiver for French-registered telecom subsidiary of Anil Ambani's Reliance Communications in 1995, and BJP-led government's deal to buy 36 Rafale jets from France are "totally inaccurate, tendentious and is a mischievous attempt to disinform".
It called the reports by French media "conjectural connection". "Neither the period of the tax concession nor the subject matter of the concession relate even remotely to the Rafale procurement concluded during the tenure of the present government," the MoD stressed.
Prime Minister Narendra Modi had announced the procurement of a batch of 36 Rafale jets after talks with the then French President Francois Hollande on April 10, 2015 in Paris. The final deal was sealed on September 23, 2016.
French ambassador to India, Alexandre Ziegler also categorically refuted reports that taxes to the tune of 143.7 million Euros were waived off. The French embassy said a global settlement was reached with the firm under the legislative and regulatory framework. "A global settlement was reached between French tax authorities & Reliance Flag in tax dispute pertaining to period 2008-2012," he said, further pointing out that this settlement was conducted in full adherence with legislative and regulatory framework governing this common practice of the tax administration. "It was not subject to any political interference whatsoever," Ziegler said.
Reliance Communications issued a statement saying the tax issue was settled before the government decided to purchase the jets from Dassault Aviation.
"The tax issue involving Reliance Flag dates back to 2008," the company said. "Reliance Flag had said the tax demands were completely unsustainable and illegal. Reliance denies any favouritism or gains from the settlement."
The statement further added: "During the period under consideration by the French Tax Authorities in 2008-2012, Flag France had an operating loss of Rs 20 crore (2.7 million Euros). French tax authorities had raised a tax demand of over Rs 1,100 crore. As per the French tax settlement process, a mutual settlement agreement was signed to pay Rs 56 crore as final settlement."
The controversy presented the opposition Congress with fresh ammunition to fire at the Prime Minister. "Reliance Atlantic Flag France of 'AA' had a total tax liability 151 million euros in France," said Congress spokesperson Randeep Surjewala, "After PM Modi announced purchase of 36 Rafale fighter jets "off the shelf" from Dassault, France suddenly turned benevolent and cancelled a tax recovery of 143.7 million euros and settled it for just 7.6 million euros. This is called zero-sum choices, startling tax concession and Modi-ji's blessings."
BJP spokesperson Shahnawaz Hussain retaliated saying, staring at its imminent defeat in the Lok Sabha elections, the Congress is levelling "baseless" allegations. "Every day they are spreading canards about the Modi government," he said.
FRENCH CONNECTION
The French newspaper Le Monde reported on Saturday that French tax authorities waived off Euros 143.7 million in fines owed by Anil Ambani’s Reliance Communications owned Reliance Flag Atlantic France. The authorities accepted 7.3 million euros from Reliance Flag Atlantic France as settlement, against original demand of 151 million euros. Reliance Flag owns a terrestrial cable network and other telecom infrastructure in France.
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