Union Finance Minister Arun Jaitley is believed to have recused himself from matters pertaining to the Rs. 20,000 crore Vodafone tax dispute and delegated decision making in this regard to his junior Minister Nirmala Sitharaman.
Mr. Jaitley has on file recorded that all issues relating to the Vodafone tax case be referred to Minister of State for Finance Sitharaman or Revenue Secretary Shaktikanta Das, sources said.
No reason for Mr. Jaitley’s decision was given but it may be linked to the fact he could have been associated with either parties in the case in his capacity as a senior lawyer.
Sources said in case of an unresolved issue or a conflict, Jaitley has desired that the matter be referred to Prime Minister Narendra Modi.
According to sources, even the appointment of former Supreme Court judge R.C. Lahoti as arbitrator in the tax case was approved by Ms. Sitharaman.
The appointment of arbitrator follows Vodafone’s notice on April 17 saying it will go ahead with international arbitration, preferably in London, to resolve the long pending tax dispute concerning its 2007 acquisition of Hutchison Whampoa’s stake in Hutchison Essar.
While the basic tax demand was Rs 7,990 crore, the total outstanding, including interest and penalty, is estimated to have risen to Rs 20,000 crore.
Vodafone, in its arbitration notice, has said that it wanted to move ahead with the arbitration without waiting for the ITAT decision on the Rs 3,700 crore transfer pricing case.
Vodafone is locked in twin tax disputes with the government. One pertains to its 2007 acquisition and the other is the transfer pricing case involving Vodafone India Services.
The Supreme Court had ruled in Vodafone’s favour in 2012, saying the company was not liable to pay any tax over the acquisition of assets in India from Hong Kong-based Hutchison.
The government, however, amended the tax laws with retrospective effect to undo the Supreme Court judgement and claim taxes.