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Vodafone for conciliation on tax dispute

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"The govt has held one preliminary meeting to explore terms of reference of such a conciliation"
The government and Vodafone are getting closer to settling their eight- year tax spat over the 2007 Hutch- Vodafone crossborder deal. The British telecom major, which had sought arbitration under the Indo- UK bilateral investment protection treaty in June, has formally approached the finance ministry for conciliation.
In a series of tweets on Wednesday, Revenue Secretary Hashmukh Adia said “ Vodafone has in a written communication expressed its desire to go for conciliation for its tax disputes with India” and the government held a preliminary meeting to explore theterms ofreferenceofsuchconciliation on October 10. He, however, was quick to add that more follow- up meetings would be held for finalisation of the terms.
Sources familiar with the developments said in their meeting with Vodafone’s global chief executive Vittorio Colao last month, finance ministry officials had told him the government could look at waiving the penalty and interest component, if the firm is willing to pay the principal outstanding tax of about ? 8,000 crore of the total disputed amount of about ? 20,000 crore.
A spokesperson from London did not want to share specificenquiries by Business Standard,but said the company has always made clear its openness to discuss the possibility of settlement, but the content of any discussions with the Indian government would remain confidential.
The Supreme Court had ruled in Vodafone’s favour in 2012, saying it was not liable to pay tax over the acquisition of assets in India fromHutchison. Thegovernment, however, amended the laws with retrospective effect to undo the judgment and claim taxes.
CASE HISTORY
  • Sept 2007: Vodafone International BV slapped with $2- billion income tax demand.
  • Jan 2012: SC says transaction carried outside India cannot be taxed, sets aside I- T depts claim.
  • Feb 2012: I- T department slaps ~3,100- crore tax notice on Vodafone India.
  • Mar 2012: Pranab Mukherjee (then FM) proposes to amend I- T Act to retrospectively tax foreign transactions.
  • Sept 2013: Bombay HC dismisses Vodafones petition, refers it back to tax tribunal.
  • Oct 2014: Bombay HC strikes down ~ 3,100- crore tax demand in Vodafone India.
  • Dec 2014: Tribunal says Vodafone liable for tax payments.
  • Sep 2015: HC sets aside tribunal order on Vodafone tax notice.
  • Oct 2015: Bombay HC rules in favour of Vodafone in transfer pricing case of call centre business.
Business Standard, New Delhi, 19th Nov. 2015

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