Vahanvati meets Pranab to discuss Vodafone case

Finance Minister Pranab Mukherjee on Saturday held a meeting with Attorney General G E Vahanvati and is believed to have discussed whether the government should file a review petition in the Supreme Court on the Vodafone tax dispute case.

Vahanvati, who met Mukherjee at the North Block in the evening, refused to speak to reporters. Sources said the attorney general was called by the minister for his views on filing a review petition on the January 20 SC order.

The income tax (I-T) department had demanded Rs 11,000 crore tax from Vodafone International Hold-ings following its acquisition of interests in Hutchison-Essar Ltd in 2007 overseas.

In its judgment that has wide tax implications, the apex court had set aside the Bombay High Court's decision that had favoured the I-T department. In the ruling, the court had also asked the department to return Rs 2,500 crore deposited by Vodafone International Holdings within two months along with four per cent interest. The court also asked its registry to return within four weeks, the bank guarantee of Rs 8,500 crore given by the telecom major.

The Supreme Court decision will have implications on similar cross-border deals where the companies have not paid capital tax gains.

The finance ministry had earlier constituted a 10-member core committee comprising senior officials of the tax department to study the judgment. The committee, headed by Director General International Taxation, R N Dash, had deliberated on the issue and submitted a preliminary report to the Central Board of Direct Taxes.