A Day after the approval of the Finance Bill by the Lok Sabha, the government on Wednesday said that it will move ahead to recover the tax and penalty from the British telecom major Vodafone which is currently estimated at Rs. 20,300 crore. Finance secretary RS Gurjal said that no new notice would be required in the Vodafone case as the Finance Bill, 2012 would validate all the notices send earlier, even as the telecom company described the tax law amendment as “grossly unjust” and said it would take all possible steps to safeguard its shareholders’ interest.
“…in the Finance Bill there is a validation clause, which is that all orders and assessments which has been passed in this regard stands validated. Once that is there, assessment order of the tax as well as order pertaining to penalty (stands) validated by Parliament”, he told a television channel UTV Bloomberg.
Gujral further added, “it is government’s job to take action to collect dues.”
Earlier in the day, Vodafone said in a statement, “we are naturally disappointed that, despite very widespread concern in India and internationally, the government has not seen fit to propose amendments to address the uncertainty caused by retrospective tax legislation.”
The Lok Sabha has approved the Finance Bill, 2012 which seeks to amend the Income Tax, 1961 with retrospective effect to tax overseas deals involving domestic assets.
The amendment would neutralise the victory secured by Vodafone in the Supreme Court in the Rs. 11,000-crore tax dispute case.
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 tax liability of Vodafone, after taking into account the penalty and interest has been estimated at Rs. 20,300 crore.