I-T department threatens to sell Vodafone assets

New Delhi: The income-tax (I-T) department has threatened to seize the assets of UK-based Vodafone Group Plc in India if the company doesn’t pay a disputed  Rs 14,200-crore tax demand that is still undergoing international arbitration proceedings.

The notice was sent on February 4 to Vodafone seeking Rs 14,200 crore in taxes, which it says are due from its $11 billion acquisition of Hutchison Whampoa’s India telecom business in 2007.

“We can confirm that we have received a tax reminder from the tax department that also references asset seizures in the event of non-payment,” said Vodafone in a statement. The company said that this dispute is currently the subject of arbitration.

However, the government played down the controversy on Vodafone notice. “The notice in Vodafone case is a routine exercise of sending collection notice to all those whose dues are not stayed by any court,” revenue secretary Hasmukh Adhia tweeted. He said that the party can always approach assessing office with a request to stay the demand as per law.

“In case assessing officer does not agree, party can go to next higher authority and get a stay,” he said.

Taking a pot-shot at the government’s promise of a tax-friendly environment, Vodafone further said: “In a week, when Prime Minister Modi is promoting a tax-friendly environment for foreign investors — this seems a complete disconnect between government and the tax department.”

The dispute traces back to Vodafone’s $11 billion acquisition of a 67 per cent stake in the mobile-phone business owned by Hong Kong-based Hutchison Whampoa.

While Vodafone has said it doesn’t owe the government money as the transaction was conducted offshore, the tax department has sought to collect taxes on the deal because it involved the assets in the country.