Notice to Vodafone part of routine process: CBDT official

After serving a Rs 14,200-crore tax demand reminder to Vodafone in a long-running dispute, the Income-Tax department today sought to play down the notice saying it was "part of a normal process".

A senior tax department official further said that the government is keen to have a predictable and stable taxation regime as envisaged by Prime Minister Narendra Modi, even as the company asserted that the "reminder" goes against the promise of "a tax-friendly environment".

The department has issued telecom giant Vodafone a reminder for what it claims to be Rs 14,200-crore capital gains tax dues and has threatened to seize assets on non-payment.

"The department is strictly adhering to the regulations and serving of notice (to Vodafone) was just normal one (procedure). The assessing officials issue assessment orders and demand notices as part of the normal process," Surabhi Sinha, member, Central Board of Direct Taxes told reporters on the sidelines of Make in India week.

She did not specifically name the company Vodafone.

The department on February 4 sent a notice to Vodafone International Holdings BV seeking Rs 14,200 crore in taxes, which it says, are due from its $11 billion acquisition of Hutchison Whampoa's telecom business here in February 2007. The matter is under international arbitration.

It can be noted that Vodafone had won the tax dispute case after the Supreme Court in 2011 threw out the government claim on capital gains tax.

The then UPA government brought in changes in taxation policy with retrospective effect (dating back to 1960s), wherein more than a dozen tax disputes, involving MNCs were reopened.

The domestic arm of Vodafone is also fighting three other tax cases involving close to Rs 10,000 crore. Of these, the company has won two in the Bombay High Court.

According to Sinha, the government is keen to have a predictable and stable taxation regime as envisaged by the Prime Minister. However, she declined to comment further on the Vodafone matter.

Reacting to the notice, Vodafone said in a statement, "the government had stated in 2014 that existing tax disputes, including ours, would be resolved through the existing judicial process."

The company also made a reference to the promise made by Modi at Make-in-India event in Mumbai on Saturday.

The British telecom major has disputed the tax demand over its acquisition of 67% stake in Hutchison, now called Vodafone India, arguing that no tax was due as the transaction was conducted offshore.