UK-based Vodafone Plc on Friday said that it was considering action against the Indian government against its proposed amendments in the income-tax legislation that would allow the government to tax Rs 12,000 crore on the Hutch deal.
"We can confirm that we are urgently considering a number of courses of action, both in India and internationally, in consultation with our advisers and we continue to discuss these issues with a wide range of stakeholders both in India and internationally," said the company in a statement.In January, the company won a case against the government when the Supreme Court ruled that it did not need to pay tax to the Indian government as the transaction took place between two overseas firms and there was no provision in Indian law to tax such deals.
"It is difficult for Vodafone to go for arbitration under bilateral investment pact between India and Netherlands. If the company seeks protection under this pact, then it will contradict its stand in the Supreme Court that the transaction can not be taxed as it took place between two overseas firms," said head of a Delhi-based law firm.
The case relates to a deal in 2007 when Vodafone, through group firm Vodafone International Holdings, bought Hutchison Telecommunications India's stake in Hutchison Essar for $11.7 billion. The IT department held Vodafone was liable for not deducting tax at source from the payment made to Hutchison and claimed around Rs 12,000 crore in tax and penalty on the deal.