Inter-ministerial group on Vodafone deliberates on its notice; holds issue not covered under BIPA

The inter-ministerial group (IMG) constituted to respond to Vodafone's arbitration notice held that the issue of taxation was out of the ambit of the Bilateral Investment Protection Agreement (BIPA) between India and Netherlands. "Taxation does not come under BIPA. Money for deal came from over 20 companies (which are subsidiaries of Vodafone) ... We will meet next week again," said an official after attending the first meeting of the IMG. The government had set up the IMG to formulate India's response to the notice given by the British telecom giant under bilateral investment treaty on the proposed retrospective change in the finance bill that would make all overseas indirect transfers with and underlying Indian asset taxable in India. The group, headed by finance secretary R S Gujral, includes representatives of the ministries of external affairs, telecom, law and revenue. "Today's meeting was a preliminary one. The IMG will meet again before finalising the response," the official said. The Dutch subsidiary of UK-based telecom major Vodafone had last month served a notice on the Indian government invoking the BIPA. 

Source : ET