Hinduja-owned IndusInd International Holdings’ (IIHL) ₹9,861-crore acquisition of Anil Ambani-promoted Reliance Capital has hit another roadblock, with the Mauritius based company saying the final payment to creditors would have to be adjusted for more than ₹1,000 crore in Goods and Services Tax (GST) dues that insurance companies owned by Reliance Capital owes to the tax department.
The tax dues could increase given the likely penalties imposed on the insurance companies for non-payment of dues, which has made both parties wary of any compromise, two people familiar with the details said.
In a letter to creditors last month, IIHL sought adjustment of these previous tax notices although creditors are reluctant. Given the deadlock, the NCLT may have to take a decision on this thorny issue.
“This is an issue that has been simmering for the last few weeks. IIHL has written to the committee of creditors (CoC) last month saying that the tax dues cannot be borne by them. CoC obviously does not want to lose such a large amount to this demand. Both parties have had meetings on the issue but the deadlock has continued,” said a person familiar with the issues.
Multiple discussions have been held on the issue in meetings between the CoC and IIHL but both sides are not yielding. This has now become the bone of contention to complete the deal more than a year since the CoC approved the transaction in June last year.
“IIHL has communicated that it will hold back the amount of tax dues and pay the rest. The amount will only be given to the CoC when the tax issues are resolved,” said a second person aware of the details.
So far no agreement has been arrived at by both parties with a court approved solution a likely possibility. “The case has been mentioned in NCLT which has been hearing the matter. The next hearing is on September 19 but it is not clear whether this dispute on the tax dues will be taken up,” said the first person cited above.
IIHL and RBI appointed administrator Y Nageswara Rao did not reply to an email seeking comment.
Source: Economic Times