By IANS,
New Delhi : Britain-based Vodafone Tuesday said it would prefer to reach an amicable solution to its Rs.11,000 crore capital gain tax dispute with the Indian government over the acquisition of assets of Hutchisson-Essar in the country.
The company served the Indian government a notice of dispute regarding the proposal in the Finance Bill 2012 to amend the law to tax overseas mergers and acquisitions involving Indian assets, saying it violated the international legal protections granted to Vodafone and other international investors in India.
“The firm has asked the Indian government to abandon or suitably to amend the retrospective aspects of the proposed legislation as Vodafone would prefer to reach an amicable solution to this matter,” the company said in a statement.
If the government was not willing to do so, Vodafone said it will take necessary steps to protect its shareholders’ interests, including commencing investment treaty arbitration proceedings under the BIT (bilateral investment treaty) against the government.
The notice was served by the group’s Dutch subsidiary Vodafone International Holdings BV (VIHBV). It is the first step required prior to the commencement of international arbitration under the BIT between India and the Netherlands.
VIHBV is a company constituted under the laws of the Netherlands.
Vodafone said that under the treaty the Indian government is liable to accord fair and equitable treatment to investors, provide security, not breach the legitimate expectations of investors in making investments and not deny justice or breach previously provided assurances.
The government is also not supposed to take steps indirectly expropriate the investment, it said.
The company also said the proposal of the government, if enacted, would have serious consequences for many Indian and international businesses.