The Union Cabinet on Tuesday approved the start an out-of-court, non-binding conciliation process with Vodafone Group in the high profile Rs. 11,000-crore tax dispute case, Finance Minister P Chidambaram announced.

The outcome of the conciliation process will, however, finally have to gain Parliament's approval.

Announcing the development, Mr. Chidambaram said, "We have just accepted a proposal for a non-binding conciliation. If the outcome is acceptable to the government then it will go Cabinet and thereafter to Parliament for approval."

Mr. Chidambaram added that no precise timeline was determined for the conciliation and that the government would communicate it to telecom firm within 1-2 days. He also declared that the proposal was for conciliation under the country's Arbitration & Conciliation Act, but it wasn't arbitration.

Indian tax authorities asked Vodafone to pay Rs. 11,000-crore in tax and interest for its acquisition of the Hong Kong-based Hutchison Whampoa's telecom business that involved stake in Hutchison Essar in 2007.

Vodafone challenged the demand, and the Supreme Court ruled in its favour, ruling that the company wasn't liable to pay any tax over its purchase of Whampoa's telecom business.

But, the dispute continued as the government made an amendment in the Income-Tax Act with retrospective effect to undo the apex court's ruling.