Mumbai: India has told the country's second largest mobile carrier Vodafone Group Plc that it may have to seize the company's India assets, if it fails to fulfil a tax demand of Rs 14,200 crore. The company received the information in the form of a notice by Anil Sant, Deputy Commissioner of the Income Tax department.
Vodafone confirmed receiving the letter dated February 4, maintaining its stand that it was a disputed tax demand and that the issue was under international arbitration.
“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. This dispute is currently the subject of international arbitration. The Indian government stated in 2014 that existing tax disputes, including ours, would be resolved through existing judicial process,” the company said in a statement today.
Vodafone also targeted the tax department saying its behaviour did not indicate that they were on the same page as the government.
“In a week when Prime Minister Modi is promoting a tax-friendly environment for foreign investors this seems a complete disconnect between government and the Tax Department,” it said.
The dispute relates to Vodafone's $11 billion acquisition of a 67 per cent stake in the mobile-phone business owned by Hutchison Whampoa, now part of CK Hutchison Holdings Ltd.
While Vodafone has said it doesn't owe the Indian government money because the transaction was conducted offshore, Indian authorities have sought to collect taxes on the deal because it involved the assets in the country.
Vodafone then began international arbitration proceedings on the tax bill in 2014. It's the biggest of three disputes Vodafone has had with India's government under former Prime Minister Manmohan Singh.