Income tax department threatens to seize Vodafone assets over tax dispute

In apparent contradiction to the promise that old tax disputes would not be pursued aggressively, India said it may seize Vodafone Group Plc's assets in the country if the company doesn't pay a disputed Rs14,200 crore tax bill that's still undergoing international arbitration proceedings, according to a copy of the notice that was sent to the company this month.

Anil Sant, deputy commissioner of income tax, informed the company's Vodafone International Holdings BV Dutch unit of its dues in a letter dated 4 February, reported Bloomberg News, quoting from the document, which say it said it had  seen.

Vodafone  spokesman Ben Padovan and a representative at India's tax department declined to comment, the report added.

Any overdue amounts, even from overseas companies, may be recovered ''from any assets of the non-resident which are, or may at any time come, within India'', according to the letter.

Vodafone has been fighting Indian tax authorities for years over its purchase of billionaire Li Ka-shing's mobile-phone business in the country during 2007 in a case that analysts have said may influence foreign investors' perceptions about India.

It's not immediately clear what the government's next steps would be if Vodafone were to decline the payment request.

The dispute traces back to Vodafone's $11 billion acquisition of a 67 per cent in the mobile-phone business owned by Hutchison Whampoa, now part of CK Hutchison Holdings Ltd.

While Vodafone has said it doesn't owe the Indian government money because the transaction was conducted offshore, Indian authorities have sought to collect taxes on the deal because it involved the assets in the country.

Vodafone, the second-largest mobile carrier in India, began international arbitration proceedings on the tax bill in 2014. It's the biggest of three disputes Vodafone has had with India's government under Prime Minister Narendra Modi's predecessor Manmohan Singh (See: Vodafone seeks arbitration as tax talks with government collapse).

The other disputes involved the valuation of international transactions - a case that Vodafone won at the Bombay High Court (Bombay HC annuls Rs3,100-cr tax demand on Vodafone's call centre deal) - and a separate ruling in October, whereby the court ruled that Vodafone didn't owe as much as Rs8,500 crore in back taxes.