Essar Group seeks Rs 4,000 crore refund from I-T dept

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New Delhi, April 30
Ruias-owned Essar Group is seeking a refund of Rs 4,000 crore capital gains tax deducted six years ago when it sold stake in telecom venture to Vodafone Plc of the UK. The group’s Mauritius unit, Essar Communications in July 2011 had sold 22 per cent in Vodafone Essar for USD 4.2 billion. Vodafone, however, paid Essar USD 3.32 billion after withholding USD 0.88 billion (around Rs 4,000 crore) as tax deducted at source (TDS). It deposited that money with the income tax department as tax on long-term capital gains made by Essar. Official sources said Essar Communications has moved the Authority for Advanced Rulings (AAR) seeking a refund of the tax deposited by Vodafone as it believes that no tax was due on the transfer under the India-Mauritius treaty. The tax department is, however, contesting the claim of Essar Communications, saying the deal was structured in a way so as to misuse the provision of the treaty.When contacted, an Essar spokesperson confirmed making an application for tax refund, saying tax was withheld by Euro Pacific Securities Ltd, Mauritius (EPSL)/Vodafone way back in July 2011. The application was filed by Essar Mauritius Companies in September 2012 before AAR and the same was admitted in July 2015. There have been multiple hearings in 2016-17, the spokesperson said. “

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