Vodafone opted out of conciliation and adjudication, says govt

The government on Monday clarified that it decided to withdraw the conciliation process and start adjudication process after Vodafone made it clear that it was not ready to wait for the decision of the Income Tax Appellate Tribunal (ITAT) and that it saw no merit in reviving the reconciliation process.

Vodafone, through a letter dated 13 March 2014 to the department of revenue, had stated that they saw no merit in reviewing the matter of conciliation on receipt of the decision of the ITAT and that the only body capable of resolving the issue would be an arbitration panel constituted according to Bilateral Investment Promotion and Protection Agreement (BIPA).

The government has clarified that it was then that it decided to approach the cabinet again, bringing these facts to its notice and seeking approval for withdrawal of conciliation.

Meanwhile, without waiting for the outcome of the ITAT proceedings, Vodafone International Holdings BV had, on 17 April 2014, served a ''notice of arbitration'' seeking arbitration under the BIPA between India and the Netherlands.

According to an official release, the cabinet, on 28 February 2014, deferred consideration of a proposal of the department of revenue to withdraw from the conciliation talks with Vodafone and advised that efforts be made towards expeditious adjudication of the transfer pricing dispute with Vodafone India Services Private Limited in the Income Tax Appellate Tribunal (ITAT).

The department of revenue, had on 11 March 2014, written to Vodafone requesting it to engage seriously in the proceedings before the ITAT and ensure no avoidable delay is caused.

It was stated that thereafter the matter regarding conciliation would be reviewed.

The government said the statement is being issued to clarify the correct factual position and the circumstances that led to the government's proposal to withdraw from the conciliation measures initiated earlier with Vodafone.