A French media report claimed that France waived off taxes worth 143.7 million euros (nearly Rs 1,100 crore) for a French-registered telecom subsidiary of Anil Ambani's RCon, months after India's announcement of buying 36 Rafale jets. The defence ministry said connections drawn between the tax issue and the Rafale matter are totally inaccurate and is an “tendentious and mischievous attempt” to misinform

NEW DELHI: The defence ministry and French government on Saturday denied French newspaper Le Monde’s claim that France waived off taxes worth 143.7 million euros (nearly Rs 1,100 crore) for Anil Ambani's telecom subsidiary just a few months after India’s announcement of buying 36 fighter jets from Dassault.

According to the Le Monde report which was cited by Congress to attack the BJP government for corruption, tax authorities in France had raised a demand of 60 million euros on Reliance Communications’ French subsidiary, Reliance Atlantic Flag France (RAFF ), for 2007-2010. An additional demand for 91 million euros was raised for 2010-12, taking the total to over 151 million euros by April, 2015 when Prime Minister Narendra Modi announced plans to buy 36 Rafale jets from Dassault.

It claimed French tax authorities effected a U-turn six months after the Rafale deal announcement, and agreed to accept 7.3 million euros from RAFF as a settlement. It also alleged that between February and October 2015, while the French were negotiating the Rafale contract with India, “Anil Ambani enjoyed a tax waiver of 143.7 million euros from the French state”.

Congress swiftly seized upon the report to claim that it was evidence of “layers of corruption” in the Rafale deal and of Anil Ambani benefiting because of “Modi Kripa” (patronage of the PM). “Modi hai to mumkin hai”, said Congress spokesperson Randeep Singh Surjewala, punning on one of BJP’s anti-graft campaign lines.

However, the French government dismissed the charge. “A global settlement was reached between the French tax authorities and Reliance Flag, a telecom company, in a tax dispute pertaining to the period 2008-2012. This settlement was conducted in full adherence with the legislative and regulatory framework governing this common practice of the tax administration. It was not subject to any political interference whatsoever,” it said.

The defence ministry described the report as a “tendentious and mischievous attempt” to misinform, asserting that Anil Ambani’s tax dispute with French authorities as well as its settlement pre-dated the Rafale deal.

“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 is totally inaccurate, tendentious and is a mischievous attempt to misinform,” a defence ministry spokesperson said.

In a statement, Reliance Communications refuted the charges, saying tax demands made by the French authorities were “unsustainable and illegal”. “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 ?20 crore (ie. Euro 2.7 million). French tax authorities had raised a tax demand of over ?1,100 crore for the same period. As per the French tax settlement process as per law, a mutual settlement agreement was signed to pay ?56 crore as a final settlement,” RComm spokesperson said.

The report comes just after the Supreme Court agreed to hear the petition challenging its clean chit to government over the Rafale deal and, predictably, provided fresh fuel to Congress’s campaign on the issue.

BJP said Congress had been levelling baseless charges to distract attention away from “Tughlaq Road scam” - reference to IT department’s claim about recovery of cash haul during raids on MP CM Kamal Nath’s aides. “Several other companies were given tax concessions by the French government. But Congress makes it an issue only to shift attention from issues of its own corruption,” BJP leader Meenakshi Lekhi said.