Terming the move to tax cross-border deals with retrospective effect as “grossly unjust”, the U.K.-based telecom giant Vodafone on Friday said it is considering various courses of action to safeguard its position in India.
While Vodafone did not give details of possible recourse it may take, it is being speculated that the Group, which may have to pay Rs 11,000 crore in taxes on a 2007 acquisition if the Parliament passes the law change, could invoke the terms of an India-Netherlands treaty to get compensation.
The government proposes to amend the Income Tax Act with retrospective effect to override a Supreme Court ruling that held Vodafone wasn’t liable to pay tax on its USD 11.2 billion acquisition of 67 per cent stake in Hutch Essar from Hong Kong-based Hutchison Telecom, as the deal was done between two foreign entities overseas.
“We can confirm that we are urgently considering a number of courses of action, both in India and internationally, in consultation with our advisers and we continue to discuss these issues with a wide range of stakeholders both in India and internationally,” Vodafone Group said in a statement. It, however, did not give details.
The bilateral pact between India and the Netherlands allows companies to claim back taxes in case they are forced to pay.
Vodafone asserted its position of no dues after it was affirmed by Supreme Court, which ruled in its favour.
The Indian government has already refunded Rs 2,500 crore along with four per cent interest to Vodafone, following dismissal of its review petition against January 20 order by the Supreme Court.
“The proposed changes in the Finance Bill fundamentally contradict the firm conclusions of the apex court and as such raise important constitutional questions for India as well as widespread and profound concerns in the minds of international investors,” Vodafone said.
In the USD 11.2 billion deal in May 2007, Vodafone had acquired 67 per cent stake in the Hutchison-Essar Ltd (HEL) from Hong Kong-based Hutchison Group through companies based in the Netherlands and Cayman Island.
Any action with retrospective effect unless agreed earlier is not correct. Such actions are taking place because of the unpreparedness of the concerned. In the Vodafone case the action is after the supreme court ruling. It is very difficult to accept the logic behind it.
Probably they did not pay in the coffers of concerned person , Vodaphone should go to International court of Juctice and let the govt of India answer for this taxes on retrospective basis .
they are fools and if parliamnet passes this rule they are bigger fools , so why blame kejriwal he is right because the persons with criminal records are subdued with the democles sword of XCBI enquiry hanging over their heads
Vodafone buying business and assets in India without paying tax to the govt and thereby the people is grossly unjust and illegal.
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