By Aashika Jain
Union Finance Minister Pranab Mukherjee‘s opening remarks on the Finance Bill in the Lok Sabha today have faded any hopes that Vodafone may have had of the govt deciding to step back and not make a law that taxes it for the 2007 Hutchinson transaction.
Sources close to Vodafone have told CNBC-TV18 that the company is not only seeking a penalty and interest waiver but may decide to hasten the international arbitration process.
A penalty and interest waiver has the potential to halve the $5 billion tax bill.
Sources in the finance ministry had earlier said they could look at this option if Vodafone formally sought such a waiver.
On hastening the international arbitration process, sources close to Vodafone say that the passage of this retrospective tax law would leave no scope for reconciliation and would in fact frustrate any such attempts.
The telecom major in the notice served to the government for its intention of international arbitration had provided a window for reconciliation.
Vodafone may have to quickly seek expropriation under the bilateral treaty between India and Netherlands in the Hutchinson transaction. The Vodafone investee company was based out of Netherlands.
Sources add Vodafone may also not attempt to challenge constitutional validity of this law. The only hope left is the Mukherjee’s closing remarks on the debate on 8 May.