Tax case: Vodafone in talks with Govt for possible solution

British telecom major Vodafone today said it is in talks with the Indian government to establish a framework for resolving the Rs 11,200 crore tax dispute.

"Vodafone continues to be in talks with the Indian government to see if we can establish a framework which would allow discussions to begin regarding a possible solution," the company said in a statement to PTI when asked if it has agreed to the conciliation talks with the Indian government.

According to sources, Vodafone and the government have concluded the pre-conciliation talks towards the settlement of long-pending tax dispute.

While Vodafone had selected its senior official Mathew Kirk for the pre-conciliation talks, the government was represented by law Secretary P K Malhotra.

The UK-based telecom major's Chief Executive Vittorio Colao is scheduled to visit India in the first week of December and may meet Finance Minister P Chidambaram.

The British telecom major is facing a tax liability of over Rs 11,200 crore, along with interest, on its 2007 acquisition of Honk Kong-based Hutchison Whampoa's stake in India's telecom major, Hutchison Essar.

The company has expressed its keenness to reach an amicable settlement on the matter. It had offered to settle the dispute through conciliation to which government agreed, but there are differences over the rules under which it would take place.

While the British telecom major has indicated its preference for conciliation under the United Nations Commission on International Trade Law (UNCITRAL), India has proposed settlement under the Indian Arbitration and Conciliation Act.

The Supreme Court last year had ruled in Vodafone's favour, saying the British company was not liable to pay any tax over its 2007 acquisition of mobile phone assets in India.

The government later that year changed the rules to enable it to make retroactive tax claims on already-concluded deals, drawing criticism from global business groups.

Following amendment to the I-T Act 1961 last year, the Income Tax Department had issued a letter in January to Vodafone International Holdings BV stating that the company is required to pay the tax.

Vodafone replied, saying that they do not owe anything to the Indian Government. Vodafone earlier wanted to take India to international arbitration but later offered conciliation on the issue.