Modi Govt Needs to Take a Call on Voda Ar­bi­tra­tion No­tice

The Economic Times - - Companies - OUR BUREAU

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.

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