CORPORATE PRESS RELEASES (INDIA) news desk, May 9,2012
NEW DELHI: A day after the Lok Sabha approved the Finance Bill the government suggested that it would raise a tax demand of Rs 20,000 crore on Vodafone, even as the British company said that it was disappointed with move and will take all possible steps to safeguard its shareholders’ interests.
“We are studying the legislation as amended, and will take all possible steps to safeguard our shareholders’ interests. It would be grossly unjust if, on the basis of legislation passed five years after the event, Vodafone were to be charged tax on a gain made by someone else, especially where the Indian Supreme Court unambiguously ruled that no tax was payable in India according to the laws of India in force in 2007. Given this clarity, there was no legal basis for Vodafone to withhold tax,” the telecom company said in a press release.
Vodafone had earlier served a notice on the government under the India-Netherlands investment protection agreement, threatening international arbitration if the validation clause inserted in the Finance Bill was not dropped. The government, however, went ahead and got the Lok Sabha to endorse its proposal to amend the Income Tax Act from 1962 in a bid to tax overseas acquisitions involving interests or assets in India.