The Vodafone Group of the UK on Tuesday said it has received a tax reminder from the income tax department that “also references asset seizures in the event of non-payment”.
On February 4, the I-T department sent a notice to Vodafone International Holdings BV reminding the firm about Rs 14,200 crore in taxes, which are due from its $11 billion acquisition of Hutchison Whampoa’s India telecom business in 2007. “This dispute is currently the subject of international arbitration,” Vodafone said.
“We can confirm that we have received a tax reminder from the tax department that also references asset seizures in the event of non-payment. The Indian government stated in 2014 that existing tax disputes, including ours, would be resolved through existing judicial process,” Vodafone said.
“In a week when Prime Minister Modi is promoting a tax-friendly environment for foreign investors – this seems a complete disconnect between government and the Tax Department,” the UK firm said.
While inaugurating the ‘Make in India’ event in the presence of hundreds of foreign investors in Mumbai on Saturday, Modi had said, “We have carried out a number of corrections on the taxation front. We have said that we will not resort to retrospective taxation. And I repeat this commitment once again. We are also swiftly working towards making our tax regime transparent, stable and predictable.”
Vodafone disputed the tax demand over its acquisition of 67 per cent stake in Hutchison, now called Vodafone India, arguing that no tax was due as the transaction was conducted offshore.
However, the tax department’s contention is capital gains were made on assets in India.
The Vodafone case relates to the retrospective amendment of the I-T laws carried out by the UPA government in 2012 to overturn the Supreme Court verdict, which had favoured Vodafone.
The basic tax demand for Vodafone was Rs 7,990 crore, but the total outstanding, including interest and penalty, is estimated to have risen to Rs 20,000 crore.
“The notice in Vodafone case is a routine exercise of sending collection notice to all those whose dues are not stayed by any court. The party can always approach assessing office with a request to stay the demand as per law. In case assessing officer does not agree, party can go to
next higher authority and get a stay,” revenue secretary Hasmukh Adhia tweeted on Tuesday.