Tax authorities have issued a reminder to Vodafone Group Plc asking the mobile-phone services company to pay Rs.14,200 crore of tax dues -- that the U.K.-based firm has referred to international arbitration -- or risk having its assets seized.
Vodafone confirmed receipt of the communication from the tax authorities.
"We can confirm that we have received a tax reminder from the Tax Department that also references asset seizures in the event of non-payment. This dispute is currently the subject of international arbitration," Vodafone said in a statement on Tuesday. " The Indian government stated in 2014 that existing tax disputes, including ours, would be resolved through existing judicial process.”
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The notice sent on February 4 to Vodafone International Holdings BV pertains to the company's 2007 acquisition of Hutchison's 67 percent stake in a telecom venture in India for about $11 billion. The deal was executed through companies that are not based in India.
The arbitration process does not stop the stop the tax department from going ahead and seeking dues that it feels are legitimate tax demands, said a tax consultant.
B K Sinha, Commissioner of Income Tax (C&S) CBDT told The Hindu, “These cases are from respective jurisdiction and notices are sent from respective assessing officers so it’s not centralised. I am not speaking specifically for tax demand on Vodafone but a legitimate tax demand as per this bible (IT Act) is not tax terrorism."
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"For any action the government takes it is called tax terrorism," Mr. Sinha said. "If any search is done, where we have enough evidence of tax evasion, you call it tax terrorism."
Vodafone is one of the largest overseas corporate investors in the country having committed investments of more than Rs. 1.1 lakh crore since 2007.
"In a week when Prime Minister Modi is promoting a tax-friendly environment for foreign investors - this seems a complete disconnect between government and the Tax Department," Vodafone said in the statement.