Ruling out any waiver of penalty for the British telecom major, the Centre Wednesday said it will carry on with its plans to fetch all tax dues, interest and penalty from Vodafone amounting Rs 21,160 crore, without any fresh notice to the company.
In an interview to a private TV channel, Finance Secretary R S Gujral said that no new notice would be required in the Vodafone case as the Finance Bill, 2012 would validate all the notices send earlier.
“It is government’s job to take action to collect dues….The Finance Bill is the validation clause. Once that is there, assessment order of the tax as well as order pertaining to penalty (stands) validated by Parliament,” Gujral said.
Vodafone described the amendment in the tax law as “grossly unjust” and said it will do everything within its reach to safeguard the shareholder interest.
The company may challenge the order in the court of law and the analysts said this may result in a overdrawn legal battle. But, once the finance bill gets President’s nod, the validation clause will come into effect. The government then can revive the tax demand.
The tax pertains to purchase of Hutchison’s stake in Hutchison-Essar by Vodafone for USD 11.2 billion in 2007 through a deal in Cayman Islands.
The government had almost set the stage for recovery of the tax and other dues from Vodafone on Tuesday after Parliament approved the finance Bill in which the Finance Minister Pranab Mukherjee had argued that the government was within its right to tax overseas transactions of companies that realize capital gains from the sale of their Indian assets.
Vodafone expressed disappointment on the government’s intent and said in a statement that despite widespread concerns in India and internationally, the government did not deem fit to propose amendments to address the uncertainty caused by retrospective tax legislation.
