French paper alleges 143.7 million Euros tax waiver to Ambani’s firm post jet deal; Cong calls it Modi kripa; Reliance denies link

A fresh controversy broke out with a French newspaper report that industrialist Anil Ambani’s firm was granted tax waiver worth 143.7 million Euros months after India announced the decision to buy Rafale fighter jets. The Centre moved swiftly and termed it as a conjectural mischievous attempt to disinform and said any connection with the Rafale issue was totally inaccurate.

Neither the period of tax concession nor subject matter of concession related to Rafale procurement, concluded in the present Government’s tenure, it said. Reliance Communications too denied favoritism but the Congress seized on the matter to allege that the tax waiver was due to “Modi kripa” as the PM acted as “middleman for the businessman”.

The report published in the leading French newspaper “Le Monde” comes at a time when a political slugfest is on over the Rs 59,000-crore Government-to-Government deal for 36 Rafale jets.

The Congress has repeatedly alleged wrongdoing in the contract and charged the Government with promoting Anil’s group in offsets associated with the deal with Dassault, manufacturer of the aircraft.  The Government has all along denied the charges.

Moreover, the latest news report comes months after former French President Francois Hollande claimed in an interview last year that his Government did not have a “choice” in selecting Reliance Defence as an offset partner.  It was during his tenure that the deal was announced on April 10, 2015 when Modi visited France.

The Le Monde report published on Saturday said Anil’s French-registered telecom company Reliance Atlantic Flag France was given tax waivers worth €143.7 mn by local authorities, shortly after the announcement to buy 36 Rafale jets.

The report said Anil’s telecom company was investigated by French tax authorities and found liable to pay €60 million between 2007 and 2010. In an attempt to reach a settlement, Reliance had offered to pay €7.6 million which was rejected by the authorities and upon further investigation for the period 2010 to 2012 an additional tax of €91 mn was levied.

The total tax liability as per the French newspaper was 151 million Euros and six months after the announcement by India to buy Rafale jets, the French tax authorities made a settlement with the company for 7.3 million Euros instead of 151 million Euros.

Reacting to the article, the Defence Ministry said in a statement, “We have seen reports drawing conjectural connection between tax exemption to a private company and procurement of Rafale fighter jets by Government of India. 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. Any connections drawn between the tax issue and the Rafale matter are totally inaccurate, tendentious and a mischievous attempt to disinform.”

Reliance Communications brushed aside any wrongdoing and said the tax dispute was settled under legal framework which is available for all companies operating in France.

A spokesperson of Reliance Communications said here the tax demands were “completely unsustainable and illegal” and that the company denied any favouritism or gain from the settlement. “During the period under consideration by the French Tax Authorities 2008-2012 i.e. nearly 10 years ago, Flag France had an operating loss of Rs 20 crore (Euro 2.7 million). French tax authorities had raised a tax demand of over Rs 1,100 crore for the same period,” the official said.

"As per the French tax settlement process as per law, a mutual settlement agreement was signed to pay Rs 56 crore as a final settlement," he said.

Lashing out at the Government after the tax waiver report, the Congress said the "This is called zero sum choices, startling tax concession and Modi ‘kripa’ (blessings)."  Making this charge, party spokesperson Randeep Surjewala claimed the "layers of crony capitalism" involving Modi and Ambani are now being unveiled.

"PM Modi is acting as middleman for Anil. How many other companies in France have got a tax benefit? Is this not a quid pro quo for the purchase of aircraft? It is clear only one watchman is the thief," Surjewala said.

"Those that have Modi’s blessings can get anything. If Modiji is there, then it is possible. (Modi ji ki kripa jispar ho jaye uska kuch bhi ho sakta hai, Modi hai to mumkin hai)," he said taunting the BJP with its poll slogan.