Vodafone Tax Case : Govt Not to Appeal Against Court

vodafone-tax-caseIn a clear message to the investors that retrospective taxation is a thing of the past, the government on Wednesday decided not to challenge the Bombay High Court order in the Vodafone tax case. The Bombay High Court in October 2014 had said that Vodafone is not liable to pay tax of Rs 3,200 crore.

“The government has decided not to appeal against the Bombay High Court ruling in the Vodafone tax case,” a cabinet source said.

The Vodafone tax case was related to the share transfer in one of the British company’s subsidiaries in Pune to its parent company. The Indian tax officials had raised a tax note of Rs 3,200 crore.

“Investors’ confidence has been shaken in the past because of the very fluctuating tax policy,” telecommunications minister Ravi Shankar Prasad said.

“The government, led by the Prime Minister Narendra Modi, wants to convey a clear message to investors world over that this is a government where the decisions will be fair, transparent and within the four corners of the law.”

Vodafone India welcomed the development with open arms. In a statement it said “We welcome the Indian government’s decision not to appeal the Bombay High Court ruling. Stability and predictability in tax matters are important for long-term investors such as Vodafone.”

In the Vodafone tax case Indian authorities had alleged that the company has undervalued the shares of its subsidiary – Vodafone India Services- a BPO while transferring it to the parent company in UK.  The transaction took place in 2010.

When the Bombay High Court ordered in favor of Vodafone, there were whispers in the industry corridors that the government might appeal against the court. However, India’s attorney general Mukul Rohatgi had advised the income tax department not do so in the Vodafone tax case.



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