Usually it is the government which gives notice to the companies for remittance of tax. It also peoposes and pass acts on tax and other issues. Accordingly, the Government has moved an amendment to the Finance Bill which will allow it to tax the foreign companies on their assets in India with retrospective effect.As per this amendment Vodafone will have to pay retrospective tax from 2007 till now, which will come to around Rs. 11,297 crore.

But now, the Vodafone company has issued notice to the government that unless this amendment is not dropped, it will go for arbitration under the International Bilateral Investment Treaty against the Government of India.

India government should not be cowered by this threat. It should move as decided earlier. It should not be MNCs which decide the policy of the government. But unfortunately, the track-record of the government of India shows its continued submission to pressure of foreign governments and MNCs.