Modi Govt Needs to Take a Call on Voda Arbitration Notice
The incoming Narendra Modi government will have to take a call on the arbitration notice served by British telecom major Vodafone Group in connection with its .` 20,000-crore tax dispute. In its last few key decisions, the outgoing government cleared the withdrawal of a conciliation offer made to the company, putting the ball in the court of the new government to take an independent view on this high-profile tax dispute and the retrospective tax law that triggered it.
“The proposal was cleared,” said a person privy to the development, referring to the government decision to withdraw the conciliation offer. The proposal was approved by the Cabinet on May 15, a day before the election results became clear.
It has served a notice to the government for initiating international arbitration in the matter under the India-Netherlands bilateral investment treaty. The minutes of the May 15 Cabinet meeting are yet to be circulated to the concerned ministries, a finance ministry official said. Once the minutes are circulated, the income-tax department can revive its .` 11,200-crore tax demand on Vodafone for not withholding tax on behalf of the government from the money it paid to Hutchison Whampoa for buying a majority stake in Hutchison Essar in 2007. Along with penalty and interest, the amount could be as much as .` 20,000 crore.