Vodafone, on Wednesday, said it was ‘disappointed' with the Centre's decision to go ahead with its retrospective tax law amendment and reiterated to take ‘all possible steps' to safeguard its shareholders' interests.
The British telecom giant is facing an imminent tax demand for buying Hutchinson's stake in erstwhile Hutchinson Essar in 2007 for $10.70 billion.
The Lok Sabha has already approved the Finance Bill that amends law to retrospectively tax cross-border transactions dating back to April 1, 1962.
While Vodafone has won the tax case in the Supreme Court against the government's demand of over Rs.11,000 crore as tax on the deal, the government has moved to amend the law apparently to tax the Vodafone deal. “We are naturally disappointed that, despite very widespread concern in India and internationally, the government has not seen fit to propose amendments to address the uncertainty caused by retrospective tax legislation,” Vodafone said in a statement.
“It would be grossly unjust if, on the basis of legislation passed five years after the event, Vodafone were to be charged tax on a gain made by someone else, especially where the Indian Supreme Court unambiguously ruled that no tax was payable in India according to the laws of India in force in 2007. Given this clarity, there was no legal basis for Vodafone to withhold tax,” it added.
The British firm also pointed out that since its entry into the Indian market in 2007, it had invested over Rs.50,000 crore in its operations and had connected six-crore rural Indian customers.
“During the last four years, Vodafone also has been one of the larger taxpayers in India — with its Indian businesses paying over Rs.29,000 crore into the Indian Exchequer. To underline our commitment for the long term, despite making considerable investments over the past five years, Vodafone is yet to take a single rupee out of the country,” it added.
Keywords: Vodafone tax issue, tax law amendment, Finance Bill
The concept of retrospective law seems a bit out-of-place. It seems
that an action not unlawful today, may not be so tomorrow.
You are invited to a game. You are given a set of do's and don'ts. You
play the game, by doing the do's and not doing the don'ts. You find
that a particular tactic is advantageous to you and you've checked
that it does not fall in the don'ts. You use the tactic. The game is
over. You win. You take home your prize. Then the rule-makers find out
that they didn't think of this tactic at all, in the first place. Now
that the crowd is laughing, they pull out the rule book, scribble a
few words and say - "hey mister, look here, that was foul!"
Isn't this purely a lapse on the part of the policy makers ? A case
that has been vindicated by the highest body, can simply be overthrown
by passing another law ? I understand, the intricasies of the actual
case are not as simple as the game - but really, isn't something
amiss ?
The retrospective amendments to the Finance Bill 2012 will certainly
be a matter of trepidation to entrepreneurs form overseas aiming for
taping Indian industries and carve up benefits reciprocally with the
growing Indian economy. This really shows the weight of SC in the
democratic fabric as it had already given a verdict against the
government’s move to tax Vadofone for buying Hutchinson's stake in
erstwhile Hutchinson Essar in 2007. At this time the whole of the
government can feel contented as it could refurbish the law proving
the superiority of the Parliament by declaring that though judiciary
has the powers to interpret law, the legislature has the right and
authority to carry out the necessary amendments. In the midst of this
celebration the government is unaware of the loss of its esteem on
giving opportunity to investors from abroad in transparent terms which
will adversely reflect in the future FDI partaking from overseas.
This ruling is ridiculous. Vodafone should pack up and leave. That will teach the government a lesson. What's the concept of retro-tax ? It's the government's responsibility to plug any loop-holes in the policy. It should be an incentive to clean up it's acts. It cannot take years to examine it's policy and then impose something "retrospectively". The whole concept is absolute rubbish. It's equivalent to abolishing death penalty today - and suddenly after years, someone having an epiphany and reinstating it - and then hanging everyone who has been pardoned "retrospectively". Utter rubbish !
The action of govt is clearly vindictive,having lost the case in Supreme Court twice.
Instead of firing the Babus who framed the laws "not as intended",it is taking on
the buyer (Vodofone) instead of the Seller,with a retrospective law. In India,without
using the expression "Ex post facto law" the underlying principle has been adopted
in the Article 20 (1) of the Constitution wherein:
"No person shall be convicted of any offence except for violation of a law in force
at the time of the commission of the act charged as an offence,nor be subjected to
a penalty greater than that which have been inflicted under the law in force at the
time of commission of the offence." Further, what Art. 20(1) prohibits is conviction
and sentence under an ex-post-facto law for acts done prior thereto,but not the
enactment or validity of such a law. It is for Courts to interpret a law for objection
against it of retrospective operation and remove it. Why "retro" law by itself is not
illegal is not clear.
The action of govt is clearly vindictive,having lost the case in Supreme Court twice.
Instead of firing the Babus who framed the l
Who is this 'its shareholders' that Vodafone talks about? Are they the same people that elected the Center to represent and look out for them from companies like vodafone?
The very country Vodafone's belong has a very similar law.. So if same was being implemented by India govt then why so much hulla gulla ? And we know that you are not going to leave india for many obvious reasons. And don't worry after looking into retailing sector's exposure and such incident will not affect investment much.. and on top of the all Vodafone should abide the law of Land. we have a deep habit of criticizing our country even for no reasons also.. :):)
Surprised by a supreme court ruling that went in favor to Vodafone in
January, seems Govt decided to had its way through this bill. Supreme
Court clearly mentioned that Indian tax authority does not have the
jurisdiction to tax this transaction. I can understand the sentiment but
retrospective tax provision after five years is bit too much.
May be it is not only the right time for Sachin, but also for the
PranabDa, to retire now.
the middle path of half that amount of 10,000 crore would be reasonable , given the supreme court ruling and the retrospective nature of the tax , which is unfair when commenting in general terms It seems that the government is short of money, in tax collection , and is hell bent on collecting this tax for short term gains If vodafone used the Indian supreme court ruling in an international arbitration court, who do you think will be the ultimate winner The supreme court of India and vodafone , or the Indian bureaucracy.
Vodafone will be doing itself and the Indian people a big favour by packing up and leaving. Hopefully that will finally bring the feckless government to its senses.
The Governments approach to the Vodafone Tax affair is nothing short of vindictive. Stung by the Supreme Court ruling on its untenable stand it went ahead and amended the tax law in a fit of pique. Now the FM misleads the nation by equating the retro active tax rules with containing black money. Nothing could be further from the truth. There will not be another tax claim brought under this law. The rule will remain in the statute books only after the vodfaone affair. All this For what? May be he will collect 2 or 3 billion dollars from vodafone. Then what? What is the cost to the nation? The omplete loss of faith in Indian rule of law. He now seeks to equate stable clear logical and propsective tax rules with India being a tax haven. It is a tragedy that no one calls him out on his misrepresentations, misdirections and outright lies. It is a pity that one such as he is being considered for the Presidency! There can be no doubt now that India being a dynastic-crony democracy.
Vodafone has to abide by the rules of the country.The UK had done a similar thing in the past and there was no hue and cry then....just because it was UK ??? India is no less . Pay up Vodafone !
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