<p>The government has decided to withdraw the offer of non-binding conciliation to Vodafone and defend its case in the international arbitration being planned by the UK telecom giant in the Rs 20,000 crore capital gains tax dispute, Finance Minister P Chidambaram said today.<br /><br />"I have already proposed to Cabinet that since they (Vodafone) have issued a fresh arbitration notice, the original offer of a non-binding conciliation should be taken to be as withdrawn. That offer is no longer there," he told reporters here.<br /><br />He added that the government will defend its case during the arbitration.</p>.<p>In its notice on April 17, Vodafone said it will go ahead with international arbitration, preferably in London, to resolve the long-pending tax dispute concerning its 2007 acquisition of Hutchison Whampoa's stake in Hutchison Essar.<br /><br />Vodafone gave the government two months to reply to the notice served under the bilateral investment treaty between India and the Netherlands.<br /><br />Following this, the Finance Ministry put up a proposal before the Cabinet to withdraw the conciliation offer it made to Vodafone last year.</p>.<p>In February, the Cabinet had put on hold a similar proposal, pending settlement of Vodafone's transfer-pricing case at the Income Tax Appellate Tribunal (ITAT).<br /><br />The ministry sought to withdraw the conciliation talks after Vodafone demanded the transfer-pricing row be clubbed with the capital gains tax case.<br /><br />Vodafone said in its notice that it wanted to move ahead with the arbitration without waiting for the ITAT decision on the Rs 3,700 crore transfer-pricing case.</p>.<p>The Cabinet had in June 2013 approved a Finance Ministry proposal to go in for conciliation with Vodafone to resolve the capital gains tax dispute related to its 2007 acquisition.<br /><br />While the basic tax demand is Rs 7,990 crore, the total outstanding is Rs 20,000 crore after including penalty.<br /><br />The Supreme Court had ruled in Vodafone's favour in 2012, saying it was not liable to pay any tax over the acquisition of assets in India from Hong Kong-based Hutchison.<br /><br />The government changed the rules later in 2012 to enable it to claim tax retrospectively on concluded deals.</p>
<p>The government has decided to withdraw the offer of non-binding conciliation to Vodafone and defend its case in the international arbitration being planned by the UK telecom giant in the Rs 20,000 crore capital gains tax dispute, Finance Minister P Chidambaram said today.<br /><br />"I have already proposed to Cabinet that since they (Vodafone) have issued a fresh arbitration notice, the original offer of a non-binding conciliation should be taken to be as withdrawn. That offer is no longer there," he told reporters here.<br /><br />He added that the government will defend its case during the arbitration.</p>.<p>In its notice on April 17, Vodafone said it will go ahead with international arbitration, preferably in London, to resolve the long-pending tax dispute concerning its 2007 acquisition of Hutchison Whampoa's stake in Hutchison Essar.<br /><br />Vodafone gave the government two months to reply to the notice served under the bilateral investment treaty between India and the Netherlands.<br /><br />Following this, the Finance Ministry put up a proposal before the Cabinet to withdraw the conciliation offer it made to Vodafone last year.</p>.<p>In February, the Cabinet had put on hold a similar proposal, pending settlement of Vodafone's transfer-pricing case at the Income Tax Appellate Tribunal (ITAT).<br /><br />The ministry sought to withdraw the conciliation talks after Vodafone demanded the transfer-pricing row be clubbed with the capital gains tax case.<br /><br />Vodafone said in its notice that it wanted to move ahead with the arbitration without waiting for the ITAT decision on the Rs 3,700 crore transfer-pricing case.</p>.<p>The Cabinet had in June 2013 approved a Finance Ministry proposal to go in for conciliation with Vodafone to resolve the capital gains tax dispute related to its 2007 acquisition.<br /><br />While the basic tax demand is Rs 7,990 crore, the total outstanding is Rs 20,000 crore after including penalty.<br /><br />The Supreme Court had ruled in Vodafone's favour in 2012, saying it was not liable to pay any tax over the acquisition of assets in India from Hong Kong-based Hutchison.<br /><br />The government changed the rules later in 2012 to enable it to claim tax retrospectively on concluded deals.</p>