ATO slashes claim against Radhika Oswal

The ATO has dramatically cut its claim, as the Oswals argue ANZ conducted a ‘Claytons sale’ of Burrup.

Pankaj and Radhika Oswal say their Burrup stake was undervalued by $US800m when sold. Picture: Hamish Blair

The Australian Taxation Office has reduced its claim against Indian businessman Pankaj Oswal’s wife Radhika from a total of almost $190 million to around $50m.

The reduction emerged as the Oswals’ long-running Federal Court battle against the Commonwealth Commissioner of Taxation over the alleged unpaid taxes began in Sydney on Monday.

The tax commissioner obtained judgment against Mrs Oswal for a total of $186m in 2011, comprising a tax assessment of $100m plus interest and penalties.

It is understood the tax assessment has now been reduced to $31m, plus interest and penalties which will bring it to around $50m.

However, Mrs Oswal’s lawyers will argue no tax is payable.

A central issue is how much, if any, tax Mrs Oswal was to have paid as the only taxpayer entitled to a share of the income of the family’s Burrup Trust.

The court heard Mrs Oswal - along with her husband and daughter - was a primary beneficiary of the trust, which was established in 2001 with her husband as trustee.

The Oswals’ barrister Rashelle Seiden SC told the court there was no dispute that Mrs Oswal - who was a temporary resident - did not lodge a tax return.

Ms Seiden said Mrs Oswal declared in her affidavit that she left her tax affairs to her husband.

Three weeks have been set aside for the hearing before Justice Tony Pagone.

The former Perth couple has been barred from leaving Australia until the case is resolved, after the ATO issued them with departure prohibition orders.

They are also involved in a large civil case against ANZ and receivers in the Victorian Supreme Court in which they are seeking up to $2.5 billion in compensation over the sale of their stake in the West Australian fertiliser business they founded.

Receivers had higher offers for the Australian fertiliser business owned by Indian couple Pankaj and Radhika Oswal but only went through the motions in the sale process, the court heard today.

Mr Oswal’s barrister Tony Bannon SC said it was a Claytons sale process, or one that goes through the motions.

“It’s a stalking horse process. You just go through the steps,” he told the Victorian Supreme Court on Monday.

Mr Bannon said the short-listed bidders in 2011 did not include the big international ammonia industry players.

Equity firms, some of which made decent-sized bids, were also excluded from the second round of the sale process, he said. The court heard there were a number of offers or expressions of interest that valued the Oswals’ 65 per cent stake in parent company Burrup Holdings at more than was ultimately received. They included an “opening gambit” from Apache Energy that valued the 65 per cent stake at $US870 million, Mr Bannon said.

Mr Bannon has said the stake was undervalued by $US800m when sold for $US560m in January 2012, following the appointment of receivers in December 2010.

The sale process was undertaken while there was a dispute around a gas supply agreement with Apache, which ended up being the only bidder for the Oswals’ stake.

Apache took 49 per cent of Burrup Holdings while existing shareholder Yara International lifted its stake to 51 per cent. Mr Bannon last week said Apache, which secured a new gas supply agreement, effectively ended up with tens of millions of dollars in its pocket.

Mr Bannon has also said the ANZ and PPB were focused on covering the Oswals’ debt to the bank and disregarded the couple’s interests when selling their shares.

Lawyers for the ANZ, PPB and the Burrup company, now known as Yara Pilbara, will begin outlining their case against the Oswals later this week.

The couple left Australia in December 2010 and only returned recently to be in Melbourne for the court case.

A spokeswoman for the ATO said it couldn’t comment on any individual’s tax affairs due to confidentiality provisions in the Tax Administration Act.

AAP