Voda chief meets Chidambaram, says it's good to talk

UK-based Vodafone Group Plc's Chief Executive Vittorio Colao on Tuesday met Finance Minister P Chidambaram and is believed to have discussed the long-pending Rs. 11,200-crore tax liability issue.

"It's always good to talk," Mr. Colao told waiting newspersons. He, however, did not take questions from waiting journalists.

The British telecom major is facing a tax liability of over Rs. 11,200 crore, along with interest, on its 2007 acquisition of Honk Kong-based Hutchison Whampoa's stake in India's telecom major, Hutchison Essar.

The government had proposed a non-binding conciliation to the telecom major to sort out the tax dispute.

Vodafone had earlier said that it continued to talk with the government to establish a framework to resolve the issue.

“Vodafone continues to be in talks with the Indian government to see if we can establish a framework which would allow discussions to begin regarding a possible solution,” the company had said in a statement to PTI last month when asked if it has agreed to conciliation talks with the government.

According to government sources, Vodafone had selected its senior official Mathew Kirk for the pre-conciliation talks, while the government would be represented by law Secretary P.K. Malhotra.

Although the company had been expressing its keenness to reach an amicable settlement with regard to the tax issue, there were differences over the rules under which the dispute should be taken up.

While the British telecom major has indicated its preference for conciliation under the United Nations Commission on International Trade Law (UNCITRAL), India has proposed settlement under the Indian Arbitration and Conciliation Act.

The Supreme Court last year had ruled in Vodafone’s favour, saying the British company was not liable to pay any tax over its 2007 acquisition of mobile phone assets in India.

The government, however, changed the rules to enable it to make retroactive tax claims on already-concluded deals, drawing criticism from global business groups.

Following amendment to the I-T Act 1961 last year, the Income Tax Department had issued a letter in January to Vodafone International Holdings BV stating that the company is required to pay the tax.

Vodafone replied, saying that they do not owe anything to the Indian Government. Vodafone earlier wanted to take India to international arbitration but later offered conciliation on the issue.