Vodafone India's non executive chairman Analjit Singh on Thursday met Finance Secretary R S Gujral and is believed to have discussed tax-related issues, amid the spat between the Ministry and the company over the issue of notifying the telco of its Hutch-related liabilities.
"Singh discussed tax-related issues with Gujral and informed him that Vodafone was not advised by the government to withhold tax before the transaction concluded and payment was made" Finance Ministry sources said.
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The meeting assumes significance as it comes days after Gujral had said that Vodafone was advised to withhold tax, a claim contested by Vodafone.
The spat followed Finance Minister Pranab Mukherjee's Budget proposal to amend Income Tax Act, 1961, with retrospective effect to bring into tax net Vodafone-type merger and acquisition deals involving domestic assets.
Once the amendment is approved by Parliament, the government may initiate the process of raising a tax demand of about Rs 11,000 crore for its acquisition of Hutchison's stake in Hutchison Essar.
In May 2007, Vodafone had acquired a majority stake in Hutchison Essar Ltd from Hutchison in a USD 11.2 billion deal. The Supreme Court had set aside I-T department's demand for the tax.
Vodafone in a statement this week had claimed that it had never received any communication from authorities to withhold tax while making payment to the Hutchison and had described the comments of Finance Secretary R S Gujral in this connection as "untrue".
The Finance Ministry on Wednesday hit back at Vodafone's claim, saying that the British telecom giant was provided a copy of the notice.
"We have provided copies of the letter (about tax liability) to the concerned parties," a finance ministry official had pointed out.
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