Vodafone has served an arbitration notice on the Central Government over its Rs.20,000 crore tax dispute with Indian revenue authorities. Following this, the government is believed to have withdrawn all conciliatory proceedings which were initiated for an amicable settlement of the dispute with the British company.

A non-binding conciliation offer was made to Vodafone in June last year but it did not yield any satisfactory result for the telecom major.

Confirming the move, Vodafone in a statement said: “Vodafone confirms that Vodafone International Holdings BV (VIHBV) has commenced an international investment arbitration against the Indian government under the Bilateral Investment Treaty (BIT) between India and the Netherlands.”

“The BIT arbitration, which was filed on April 17, 2014, arises from the government’s 2012 enactment of retrospective taxation on VIHBV’s acquisition of indirect interests in Hutchison Essar Ltd in 2007, which the Supreme Court held was not taxable under the law at the time,” the statement said.

“Since Vodafone and the Indian government have been unable to find an amicable means of resolving the dispute, Vodafone has commenced an international investment arbitration as a way to achieve resolution,” it added. Vodafone has stated that it would opt for international arbitration preferably in London to resolve the tax dispute. The Indian government has been given two months time to respond.

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