The Income Tax department has issued a reminder notice to Vodafone over its Rs 14,200 crore tax dues, a move which the UK firm said shows disconnect with Prime Minister Narendra Modi‘s promise of a tax-friendly environment, but the government defended it saying the step was a routine exercise. “The notice in Vodafone case is a routine exercise of sending collection notice to all those whose dues are not stayed by any Court,” Revenue Secretary Hasmukh Adhia tweeted late in the night. Also Read - Fake WhatsApp message claims free internet for three months, don't fall for itAlso Read - Vi (Vodafone Idea) is now focusing on growing broadband business with You Broadband
The I-T department on February 4 sent a notice to Vodafone International Holdings BV seeking Rs 14,200 crore in taxes, which it says are due from its $11 billion acquisition of Hutchison Whampoa’s India telecom business in 2007. The matter is under international arbitration. Adhia said, “The party (Vodafone) can always approach assessing officer with a request to stay the demand as per law. In case assessing officer does not agree, party can go to next higher authority and get a stay.”
A Vodafone spokesperson had earlier in the day said: “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.” The tax demand relates to a dispute that is currently the subject of international arbitration, he said. The British telecom major has disputed the tax demand over its acquisition of 67 per cent stake in Hutchison, now called Vodafone India, arguing that no tax was due as the transaction was conducted offshore.
But the tax department’s contention is that capital gains were made on assets in India.
“The Indian government stated in 2014 that existing tax disputes, including ours, would be resolved through the existing judicial process,” Vodafone said in the statement.
The company also made a reference to the promise made by Modi at Make in India event in Mumbai on Saturday.
“In a week when Prime Minister Modi is promoting a tax-friendly environment for foreign investors – this seems a complete disconnect between the government and the tax department,” Vodafone said.
Aimed at promoting India as a manufacturing destination, the government is observing ‘Make In India Week’ in Mumbai. The event was launched by Modi on Saturday.
“We have carried out a number of corrections on the taxation front. We have said we will not resort to retrospective taxation. And I repeat this commitment once again. We are also swiftly working towards making our tax regime transparent, stable and predictable,” Modi had said. The Vodafone case relates to the retrospective amendment of the I-T laws carried out by the UPA government in 2012 to overturn the Supreme Court verdict, which had favored Vodafone.
The basic tax demand for Vodafone was Rs 7,990 crore, but the total outstanding, including interest and penalty, is estimated to have risen to Rs 20,000 crore.