Vodafone sends rejoinder to govt on tax matter: Sources

It's a reminder to the government courtesy Vodafone. The telecom giant has sent a rejoinder to the government seeking an undertaking on the retrospective amendment. CNBC-TV18's Aakansha Sethi reports.

Vodafone had earlier sent a trigger notice for arbitration under the bilateral investment treaty with Netherlands to the government saying that why has the retrospective amendment being brought in and that it is against the investment spirit of the treaty.

To this, the government has replied saying that the tax refund has been made as per the Supreme Court order and hence there is now no case for arbitration.

Vodafone has now sent a rejoinder on this reply of the government saying that if that is the case and if there is no case for arbitration then give us an undertaking saying that the retrospective amendment will not be applied to us because if that is not the case then according to Vodafone there is a case for arbitration.

This was sent on June 5 to the government. However, as of now, the government has not prepared any reply to this and IMG will meet on July 22 to discuss its reply.

This inter-ministerial group was set up earlier to respond to the BIPA notice and it comprises officials from the law ministry, telecom and finance ministries. So, this group is going to meet and finalize what the government is going to say and that is going to be key in deciding the road ahead for Vodafone because if the government does not give an undertaking to this effect, it means that the tax battle with Vodafone is very much on.

It remains to be seen how the government handles this. As of now, sources in the finance ministry are saying that they do not want to do anything to annoy foreign investors. That seems to be the latest line in the finance ministry.