Vodafone Tax News

British telecom giant Vodafone Group plc on Friday won an arbitration against the Indian government over a demand for Rs 22,100 crore in taxes using retrospective legislation. An international arbitration tribunal ruled that India's demand in past taxes were in breach of fair treatment under a bilateral investment protection pact.

Dismissing notions of contradiction between ministerial assurances and departmental actions on retrospective taxation, Union Minister Jayant Sinha on Thursday said Income Tax department has to follow "due process of law" in the Rs 8,500-crore Vodafone transfer pricing case.

Vodafone on Wednesday told Delhi High Court that it will file a reply by Friday to the income tax department's show cause notice asking the company why its 2011-12 financial records should not be subjected to a special audit.

The Delhi High Court on Monday asked Vodafone to reply to Income Tax Dept show cause notice by March 23.

CBDT Chairman Atulesh Jindal said "as long as" the retrospective amendment of the IT Act passed by Parliament remains valid, the "demand (of tax against them) remains valid."

After serving a Rs 14,200-crore tax demand reminder to Vodafone in a long-running dispute, the Income-Tax Department today sought to play down the notice saying it was "part of a normal process".

Global telecom giant Vodafone has taken exception to the Indian tax department threatening to seize its assets if it fails to pay a disputed demand of over Rs 14,000 crore, which is still under international arbitration.  

The British telecom major has disputed the tax demand over its acquisition of 67 percent stake in Hutchison, now called Vodafone India, arguing that no tax was due as the transaction was conducted offshore.

Vodafone has 30 days to respond to the fresh notice, the news channel`s report said.

In a fresh blow to Vodafone India, the Income Tax Appellate Tribunal has ruled that the tax authorities have the powers to raise a demand on the telecom major in the Rs 8,500 crore transfer-pricing dispute.

The Central Board of Direct Taxes (CBDT) will give its views on the high court order on Vodafone transfer pricing case after studying the judgement, chairman K V Chowdary said Monday.

Vodafone is locked in a separate USD 2 billion dispute with the Government over its buying of Hong Kong-based Hutchison's stake in Hutchison-Essar.

Vodafone said that its Indian subsidiary had received a letter in January last year from the authorities reminding it of the tax demand of Rs 14,200 crore in relation to the dispute over acquisition of Hutchinson in 2007.