The India government has decided to withdraw its conciliation proposal to sort out the Rs 20,000 crore tax dispute with Vodafone and collect dues, PTI reported.
The report says the finance ministry has floated a Cabinet note seeking to withdraw the conciliation process with Vodafone International Holdings.
There’s no official confirmation from Vodafone.
In June 2013, the Cabinet had approved a finance ministry proposal to go in for conciliation with Vodafone, a leading mobile service provider in India, to resolve the capital gains tax dispute related to its acquisition of Hutchison Whampoa’s stake in Hutchison Essar in 2007.
This will be a big blow to the telecom growth plans of Vodafone in India.
The report says though the finance ministry was keen on an amicable solution to the long-pending tax dispute, dilly-dallying by the company led to the collapse of the talks.
Vodafone wanted to club a Rs 3,700 crore transfer-pricing case of Vodafone India Services with the capital gains tax issue, a demand that could not be accepted by the finance ministry – headed by P Chidambaram.
While the basic tax demand for the 2007 acquisition is Rs 7,990 crore, the outstanding dues, including a penalty of a similar amount and accrued interest, run into Rs 20,000 crore.
The revenue department of India will pursue the tax demand along with accrued interest and penalty. Earlier, the I-T department had kept its tax notice to Vodafone in abeyance following the Cabinet decision to resolve the tax dispute through non-binding conciliation talks.
The Cabinet is now likely to soon take up the case as the law ministry has concurred with the finance ministry’s proposal to withdraw from conciliation.
