In a debate titled, “Is the Indian Story Over?”, Rajan S. Mathews, DG, Cellular Operators Association of India, had given his personal opinion that  it was not unconstitutional for the legislature to make retroactive clarifications to the tax law.

It appears that the general comments of Rajan S. Mathews on the rights of the government during the debate, may have been interpreted to mean that COAI supports the decision of the Indian government to retroactively clarify the tax laws in order to make the Vodafone transaction now taxable in India.

It is first emphasized that during the debate, no opinion was expressed by Rajan S. Mathews on the specifics of the Vodafone Tax Case, recently ruled on by the Supreme Court, or on the appropriateness of the decision of the Indian Government to make a retroactive clarification of the tax law in order to bring the Vodafone transaction (and similar transactions) under the jurisdiction of Indian taxes.

COAI wishes to clarify that it does not believe that it is appropriate for the government to seek to override a judicial ruling (especially by the Hon’ble Supreme Court ruling) through a retrospective change to the tax laws.

COAI believes that as a general principle, the legislature ought to provide for continuity, consistency and predictability in matters of legislation and law. This would mean that investors and taxpayers ought to be able to rely on the law in effect when the business transaction took place else the interests of investors will not be safeguarded thus leading to an inherent lack of trust in Indian policies by the investors.

COAI further wishes to emphasize that it firmly believes, that India, especially the mobile communications industry, continues to be an attractive investment destination for both foreign and domestic investors and that the Indian system, comprising the Government, the Regulator and a strong and independent judiciary, will provide adequate checks and balances to ensure that the legitimate interests of investors are fully safeguarded.