The battle to reign in the excesses of international corporate tax avoidance moved to New Delhi this week as the Indian government demanded Vodafone cough up £344m as a down-payment to settle a long-running tax dispute.
Manmohan Singh's government has given Vodafone three weeks to lodge the money with the Indian Supreme Court as it bids to wrestle £1.6bn from the company.
The dispute centres on Vodafone's takeover of Hutschison Essar, one of Asia's largest mobile operators, in 2007. A hearing on the case is due to commence in India's top court on February 24.
Vodafone argues it owes no Indian tax on the £6.9bn deal because it involved two companies headquartered overseas -- Hutchison Whampoa Limited, tax domiciled in the Cayman Islands, and Vodafone International Holdings BV, Vodafone's Dutch subsidiary.
A spokesman said: "Vodafone is confident that there is no tax liability resulting from this transaction, and all the tax and legal advice it has received remains consistent with this view."
Earlier this year, Vodafone settled a long-running £6bn dispute for tax evasion with HM Revenue & Customs for £1.2bn. That dispute centred on the £112bn acquisition of German mobile phone company Mannesmann in 2000 and subsequent "profit stashing". The settlement has been criticised in some quarters, particularly since Vodafone's financial director, Andy Halford, is an adviser to Tory Chancellor George Osborne on corporate tax matters.
Indeed, the controversy has prompted a mass-signature e-petition and Twitter campaign against Vodafone. Activists have also staged coordinated sit-ins at a number of the company's stores across the UK over the past few weeks.