Voda Execs Call on FinMin Officials to Settle Tax Row
Fin Secy says co enthused by positive attitude of new govt, is keen on investing more in market
Vodafone, which has served an arbitration notice on India in connection with its .` 20,000-crore tax dispute, sought to reach out to the new government as the company’s executives called on senior finance ministry officials Friday. A finance ministry official said the company was keen on conciliation and settling the tax dispute outside the judicial process. The government has to ap- point an arbitrator before June 15 following the arbitration notice. The meetings come in the backdrop of the new Narendra Modi-led government promising a stable tax regime. The new law minister Ravi Shankar Prasad had declared soon after taking over that changing the law with retrospective effect should normally be avoided as India needs foreign investment. The issue goes to the heart of the Vodafone case, in which the law was changed to apply to an old transaction. Vodafone’s external affairs director Mathew Kirk met finance secretary Arvind Mayaram and revenue secretary Rajiv Takru. The company’s representatives said they were keen to invest further in the Indian market, according to Mayaram. “They came to talk to me about their plans for future investments,” he said. “They are very enthused (by the) positive attitude of new government. They are happy with their operations in the country. They say it’s a very profitable operation.”
In its last few key decisions, the Congress-led UPA government had cleared the withdrawal of the conciliation offer to Vodafone, putting the ball firmly in the court of the new government to take an independent view on this tax dispute and the retrospective law that prompted its escalation. Vodafone’s notice for international arbitration is under the IndiaNetherlands bilateral investment treaty.
The origins of the dispute lie in the decision of the Indian tax authorities, a few years ago, to impose a principal tax liability of .` 8,000 crore on Vodafone for failing to deduct tax on its $11-billion payment to Hutchison Telecommunications International for the acquisition of Hutchison Essar (now called Vodafone India). Vodafone had moved court saying that the deal took place overseas and couldn’t be taxed.