Govt delay in correspondence led to hold up: Vodafone

The Indian Government had sought an additional transfer pricing claim even as a six-month delay on its part further held up the Vodafone tax issue, the telecom major said.

Further, the UK-based company had sought to engage the Government directly on many occasions to settle the multi-billion dollar tax issue.

Vodafone, on its part, had responded to the Government’s queries in a timely manner, it said. Vodafone had entered into discussions with the Indian Government in good faith and with a desire to achieve a “fair outcome acceptable to both parties”, the company said. Vodafone is one of India’s largest international investors.

In 2012, Supreme Court delivered a verdict that there was no tax payable on the Vodafone International Holdings BV’s (VIHBV) Hutchison transaction. The Government had responded to the verdict by introducing retrospective taxation measures, which according to Vodafone, fundamentally changed the existing law. It also sought to raise a tax demand against VIHBV, five years after the Hutchison deal.

Vodafone had been battling a ₹11,200-crore capital gains tax following its acquisition of Hutchinson’s operations in India in 2007. The company had been in talks with the Government to resolve the tax issues, but they have failed, it added.

Vodafone has sought to engage directly with the Indian government to see if an outcome acceptable to both parties could be achieved with senior Vodafone representatives having met ministers and officials and written to the government on many occasions.

It suggested international conciliation mechanisms, all of which were rejected by the Indian government.