Vodafone plea dismissed by FinMin

Dismissing Vodafone’s contention in the Rs.20,000-crore tax case, the Finance Ministry has prepared a reply to the company’s rejoinder which would be sent after approval of the Prime Minister.

“We did not agree with Vodafone ... The Inter-Ministerial Group (IMG) on Vodafone has prepared reply of Vodafone’s rejoinder. The reply will be sent to the Prime Minister’s Office first. After approval of the PMO, it will be sent to Vodafone,” a senior official said after the meeting of IMG.

The government had earlier formed the IMG to look into the arbitration notice sent by the telecom major under the India-Netherlands bilateral investment protection agreement (BIPA).

The government had already replied to the initial notice arguing that tax matters were not covered under the BIPA.

Following which the British telecom major sent the rejoinder seeking an assurance that the retrospective tax amendments would not apply to acquisition of Hutchinson’s stake in Hutch-Essar in 2007.

The notice to the rejoinder, which has been prepared by the IMG, will have to be approved by Prime Minister Manmohan Singh, who had taken over the finance portfolio following the exit of Pranab Mukherjee.

Following amendment to the Income-Tax Act with retrospective effect, Vodafone may be asked to pay Rs.20,000 crore tax, interest and penalty for its 2007 acquisition despite wining the tax case in the Supreme Court. 

PTI