The Indian government has reportedly threatened to seize Vodafone's assets in the country unless the company pays a 142 billion rupee ($2.08 billion) tax bill, despite the fact that the case is still the subject of arbitration proceedings.
The government has sent a notice to the company that serves as a tax reminder, and threatens asset seizures for non-payment, Bloombergreported after viewing a copy of the document.
According to the demand, any overdue taxes from overseas can be recovered through the seizure of any assets of the company that are or may come within India.
But Vodafone has been disputing the tax demand for years, and recently filed for international arbitration in a case that is still ongoing.
These efforts are complicated by the fact that India's tax authority is insisting it is not subject to arbitration.
The current dispute revolves around the capital gains from Vodafone's $11 billion acquisition of what is now Vodafone India from Hutchison Whampoa in 2007.
After Vodafone won its initial battle over the tax bill in 2012 on the gronunds that the transaction was between two offshore companies, the government famously retroactively changed tax law to cover such transactions and served Vodafone with a fresh demand.