Vodafone Plc's CEO, Mr Vittorio Colao, met the Finance Minister, Mr Pranab Mukherjee, on Tuesday in a bid to find a settlement to the tax dispute.
“We presented our case,” Mr Colao said after the meeting, without elaborating further. The meeting comes in the backdrop of a war of words between the UK telecom giant and top officials from the Finance Ministry.
Vodafone faces the prospect of a huge tax bill if the Government enacts the Finance Bill 2012 in the current form. The Bill seeks to make retrospective changes to several provisions in an apparent bid to bring indirect transfers of shares with underlying Indian assets in the income-tax net.
Finance Ministry officials maintain that the objective of the proposed amendments is to clarify that the intent of the law was always to bring indirect transfers under the tax net.
However, the British company does not agree and had served the Indian Government with a Notice of Dispute regarding the proposal on grounds that it violates the international legal protections granted to Vodafone and other international investors in India.
Vodafone asked the Government to abandon or suitably amend the retrospective aspects of the proposed legislation as Vodafone would prefer to reach an amicable solution to this matter.
In the Union Budget, the Finance Ministry had proposed some changes in the country's tax rules retrospectively from 1962. This means transactions that took place outside India are taxable. This includes the $11.08-billion (around Rs 55,735 crore today) Vodafone-Hutchison deal.