Despite PM’s vow, I-T Dept turns the heat on Vodafone

Cough up  Rs 14,200 cr or assets will be seized

New Delhi : The I-T Department has issued Vodafone a reminder over its Rs 14,200-crore tax demand and threatened to seize its assets in case of non-payment, a move the UK firm said shows disconnect with Prime Minister Narendra Modi’s promise of a tax-friendly environment.

The dispute relates to Vodafone’s $11 billion acquisition of a 67 percent share in the mobile phone business of Hutchison Whampoa. Vodafone maintains it is not liable to pay anything to tax department since the transaction was conducted offshore, while authorities here have said the deal involved company assets in this country. The matter is under international arbitration.

Vodafone’s strongly-worded statement said the policies pursued by the tax department were at variance with what Prime Minister Narendra Modi as also Finance Minister Arun Jaitley have been saying: That India will not pursue retrospective taxation.

The company was possibly alluding to the promise made by Prime Minister Narendra Modi at the Make in India event at Mumbai on Saturday. “We have carried out a number of corrections on 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 company also reminded the I-T authorities that the Indian government had stated in 2014 that ‘‘existing tax disputes, including ours, would be resolved through the existing judicial process.”

The Vodafone case essentially 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 gone in favour of Vodafone.

The basic tax demand was for Rs 7,990 crore, but the total outstanding, including interest and penalty, is estimated to have risen since then to Rs 20,000 crore.

“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 added in its statement.

After the company put out its detailed statement, the Income-Tax Department on Tuesday sought to play down the notice saying it was “part of a normal process”.

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