New Delhi: The UK-based Vodafone Group Plc has won an international arbitration against the Government of India’s retrospective tax demand of nearly Rs.22,100 crore (USD 2.7 billion).
India can appeal against the ruling.
The telecom major had approached the Permanent Court of Arbitration in The Hague, which ruled that the conduct of India’s Income Tax Department is in breach of ‘fair and equitable’ treatment, media reported on Friday.
The tribunal said that the Government of India’s imposition of a tax liability on Vodafone is in breach of the investment treaty agreement between India and The Netherlands, and asked India to halt its efforts to claim tax dues.
The share price of Vodafone-Idea on the BSE jumped 14% after the ruling.
In October 2019, the Supreme Court of India had directed Vodafone-Idea to pay the huge amount in back-fees. The company had been weighed down by a $7.8 billion bill from the government — biggest among peers – after eight straight quarterly losses and over $14 billion of debt.
“Vodafone has finally got justice,” said Anuradha Dutt, managing partner of DMD Advocates, a New Delhi-based law firm which argued for Vodafone.
“They have held that the government is trying to recover from Vodafone the tax, interest, and penalty, which is unfair as it breaches the fair and equitable standards laid down by international law.”
A Vodafone spokesman in London confirmed the ruling, adding “the award is confidential,”
“We are studying the lengthy documents and can make no further comment at this time,” he said.
This marks the latest twist in over a decade-long tax dispute that started when Vodafone entered India by acquiring Hutchison Whampoa’s Indian operations in 2007 and was slapped with this tax bill. Vodafone disputed this tax demand and the Supreme Court agreed that no local law supported the levy of this tax. But the then Finance Minister Pranab Mukherjee amended the tax rules to apply retrospectively, triggering a legal battle that ended up in The Hague arbitration court.
(Vinayak)
