British telecommunications giant Vodafone said it had filed an application with Indian authorities to settle the retroactive tax issue. Vodafone also stated that it has “always been certain” that no tax is owed to it. In August, the government passed a bill repealing all retroactive taxes on indirect transfers of Indian assets. The bill’s guidelines aim to cancel tax claims made under a 2012 retroactive statute aimed at taxing the indirect transfer of Indian assets, as well as return any money paid in these situations without interest.
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“We can confirm we have made an application,” a Vodafone representative said when asked whether the company has filed an application with the Indian government to settle the retrospective tax dispute. “We have always been satisfied that no tax liability existed in respect of our acquisition of the Indian firm,” the spokesman said, “and this was borne up by the Supreme Court of India’s and the International Court of Arbitration’s verdicts.” On October 13, the finance ministry announced a new set of guidelines to help settle the retrospective tax issue with Vodafone Plc, the British telecom giant.
The ‘Relaxation of Validation (Section 119 of the Finance Act, 2012) Rules, 2021’ laid forth the forms and requirements for the statement that the corporation must provide in order to settle its case. Vodafone has 45 days to seek a settlement with the government, which expired in November. Taxes were sought from the corporation after the I-T department upheld an October 2010 judgement demanding Rs 11,218 crore in taxes from the British firm for its 2007 acquisition of Hutch-Essar through a Cayman Islands agreement. The tax claim was dismissed by the Supreme Court in January 2012, but it was requested to be revalidated under Section 119 of the Finance Act of 2012. Vodafone was also hit with a Rs 7,900 million fine.
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As a result, up to 15 enterprises facing retrospective tax demands have sought the government to settle their cases. The Taxation Laws (Amendment) Bill, 2021, introduced in August, repeals a tax law that granted the tax department the authority to go back 50 years and apply capital gains levies wherever ownership had changed hands outside of India but firm assets remained in India. The 2012 Act was utilised to impose a total of Rs 1.10 lakh crore in taxes on 17 corporations, including Vodafone, the largest telecom company in the world. Cairn Energy Plc approached the government last month to resolve retro tax charges and provided the necessary assurances, including indemnifying the Indian government against future claims and agreeing to abandon any legal procedures elsewhere in the globe.
