Vodafone slams govt after tax notice, says complete disconnect between Modi govt & I-T dept

All is not well in between the Vodafone Group and the government. The telecom operator slammed the Indian government, stating 'a complete disconnect between government and the tax department'.

The development took place after it was slapped with a notice asking the company to pay Rs 14,200 crore in tax bill or it may have to face asset seizures. Notably, Vodafone is still undergoing international arbitration proceedings.

According to reports, deputy commissioner of income tax Anil Sant, informed the company's Vodafone International Holdings BV Dutch unit of its dues in a letter dated 4 February. Any overdue amounts, even from overseas companies, may be recovered "from any assets of the non-resident which are, or may at any time come, within India," the letter reportedly said.

Meanwhile, this is what the company statement said earlier today: "We can confirm that we have received a tax reminder from the Tax Department that also references asset seizures in the event of non-payment."

The UK-based company said that the dispute was currently the subject of international arbitration, but expressed its surprise and dissent on the development.

"In a week when Prime Minister Modi is promoting a tax-friendly environment for foreign investors - this seems a complete disconnect between government and the Tax Department," it said.

"The Indian government stated in 2014 that existing tax disputes, including ours, would be resolved through existing judicial process," Vodafone added.

Vodafone has been fighting Indian tax authorities since it acquired 67% stake in the mobile phone business owned by Hutchison Whampoa, now part of CK Hutchison Holdings, for $11-billion in 2007.

While Vodafone has said it doesn't owe the Indian government money because the transaction was conducted offshore, Indian authorities have sought to collect taxes on the deal because it involved the assets in the country.

Vodafone, the second-largest mobile carrier in India, began international arbitration proceedings on the tax bill in 2014. It's the biggest of three disputes Vodafone has had with India's government under Prime Minister Narendra Modi's predecessor.