Vodafone Plc, which had earlier served an arbitration notice to India regarding the Rs 200 billion tax issue, has reached out to the newly formed government under the National Democratic Alliance in its bid to arrive at an out of the court settlement on the tax issue.

As per the news reports, senior representatives of the UK-based telecom company met key Indian finance ministry officials to arrive at an amicable solution regarding the tax row. Following the arbitration notice from Vodafone Plc in January 15, 2014 initiating action against the Indian government under the India-Netherlands Bilateral Investment Promotion and Protection Agreement, the government has to appoint an arbitrator before June 15, 2015.

The latest meeting between Vodafone Plc’s external affairs director, Mathew Kirk and India’s finance secretary, Arvind Mayaram and revenue secretary, Rajiv Takru comes in the backdrop of the new government promising a stable tax regime. The Vodafone Plc officers sounded positive about their current investments in the country and expressed interest to further expand their presence in India given a favourable regulatory environment.

The origins of the tax dispute involving Vodafone Pc lays in the decision of the Indian tax authorities, to impose a principal tax liability of Rs 80 billion on the operator for failing to deduct tax on its $11-billion payment to Hutchison Telecommunications International for the acquisition of Hutchison Essar (now Vodafone India). Subsequently, the operator moved court stating that the deal took place overseas and therefore could not be taxed, a claim that was endorsed by the Supreme Court in 2012. However, soon after the then United Progressive Alliance government introduced the retrospective tax law, allowing it to claim tax retrospectively on such deals.