Additional Solicitor General N Venkataraman has assured businesses that the Central government will support them in court if tax officials are found to have deliberately abused their authority.
Venkataraman was speaking alongside Senior Advocate Arvind P Datar at the Gujarat High Court Arbitration Centre (GHAC) Arbitration Week 2026 on September 5. The session at GIFT City Club was titled An Introduction to Investment Treaty Arbitration, BIT, Future of ISDS.
The three-day event has been organised by the GHAC in collaboration with the Gujarat High Court. Advocates Uchit Sheth and Soham Patel facilitated the discussion.
Venkataraman said the Centre did not want legitimate trade to suffer because of wrongful tax demands.
“If you find somebody wrong, and they have deliberately used their authority to abuse, please bring it to the notice of the court, we will support you. It's a guarantee we give. We don't want to harm trade.”
He added:
“We don't want to collect one rupee which is not due. Sure. We are mobilising the funds that are required. But what is due, even if it is one rupee, we cannot leave it.”
Venkataraman was responding to concerns raised by Datar over high-pitched tax demands and the uncertainty they create for businesses and foreign investors.
Datar said taxation policy remained the biggest concern for foreign investors. Cases involving Vodafone and Tiger Global had created uncertainty over India’s tax position, prompting investors to seek clarity on their potential liabilities. Investors could plan even for a high tax rate, he said, but could not operate under a regime where the rate appeared low initially and the liability was increased later.
He said "You want ease of doing business, the businessman should survive. And what we say, we'll protect the revenue. Yes, but what about protecting the businessman? Where does the man go?”
Venkataraman acknowledged that some demands raised by State authorities could be overly ambitious. However, he said this did not represent the Centre’s approach.
He referred to cases where the government had withdrawn notices involving amounts ranging from ₹250 crore to ₹3,000 crore after concluding that they should not be pursued. He also said internal inquiries had been conducted against officers based on complaints received by the government
Datar’s broader argument was that robust Bilateral Investment Treaties were necessary if India wanted to attract long-term foreign investment and realise its “Make in India for the world” objective.
He said India had BITs with around 80 countries by 2010, but subsequently terminated 58 of those treaties following adverse awards in cases such as White Industries, Vodafone and Cairn Energy.
“In my view, in retrospect, it may not have been the correct decision.”
Datar argued that the value of the claims brought under the treaties was relatively small when compared with the approximately $700 billion in foreign investment received by India over 15 years.
He also criticised several features of India’s 2016 Model BIT, including the exclusion of taxation, the removal of the Most-Favoured-Nation clause, and the requirement that investors first pursue domestic remedies for five years. The definition of investment under the model was also unduly restrictive, he said.
Datar particularly questioned the requirement that an investment contribute to the “significant development” of India.
“Infosys is not going to America to develop US, it is going to make money. So, Hyundai has not come to India for the development of India, it has come to make money. So don't have these fanciful things, they're business reality.”
Venkataraman defended India’s decision to reconsider its BIT framework. He pointed out that countries in Europe, South America and Africa had also terminated or restricted investment treaties because of concerns over regulatory sovereignty.
The two speakers also differed over the exclusion of taxation from BIT arbitration. Datar argued that denying foreign investors any international remedy in tax disputes would discourage investment. Venkataraman maintained that taxation was an essential sovereign function and that disputes should ordinarily be addressed through domestic courts and Double Taxation Avoidance Agreements.