The country's highest law official has said the government can raise a demand on Hong Kong-based Hutchison as it is liable to pay tax on the sale of its Indian assets to the UK's Vodafone Group in 2007, possibly opening a new front in the four-year-old tax dispute.

Attorney-General Goolam E Vahanvati has said India could legally send a notice to Hutchison, which exited the country in 2007 after selling its operations to Vodafone for over $11 billion. 

"Ultimately the tax has to be paid by either of the two companies or both. The government does not quite care, but legally a notice can be served on Hutchison," said a person familiar with the attorney-general's thinking. 

Vahanvati, in a single-page opinion sent last week to the law ministry, reiterated the position that Vodafone could be taxed for its 2007 deal, as a result of the controversial amendments in laws introduced earlier this year allowing the government to tax past transactions. The attorney-general's view could potentially make it difficult for the government to offer relief to the world's largest private mobile operator in its multi-billion-dollar tax dispute. 

The attorney-general's communication comes just days after Finance Minister P Chidambaram ordered a review of India's retrospective tax laws. Chidambaram said he would seek a 'fair and reasonable solution' to the retrospective tax proposal. The proposal significantly impacts Vodafone, and has been sharply criticised by global investors. (Economic Times)