The multinational telecommunications company, Vodafone on Friday won an arbitration against the government of India over its retro tax demand of Rs 20,000 crore, which it had called as unfair in an international court.
Sources suggest that the Permanent Court of Arbitration in Hague on Friday issued that the imposition of tax liability on the telecom company Vodafone violates the investment treaty agreement between India and the Netherlands. It said that the respondent’s (India’s) conduct in respect of the imposition on the claimant (Vodafone Group) of an asserted liability to tax notwithstanding the Supreme Court judgment was in breach of the guarantee of fair and equitable treatment.
The tribunal, in its ruling, had asked the Indian government to reimburse 4.3 million pounds to Vodafone for the fees that the Vodafone group had to pay to the arbitration group.
The issue emerged out in 2007 when the Telecom Giant Vodafone, purchased 67 per cent of Hutchison Whampoa for $11 billion dollars. The Indian government had said that Vodafone was accountable to pay taxes worth Rs 7,990 crore on the acquisition, that it had contested.
Declining govt’s claims, Vodafone group had maintained that it is not liable to pay claimed capital gains tax as India and the Netherlands had a bilateral investment treaty (BIT).
Vodafone challenged the government’s demand in the Supreme Court of India and it even won the case. But, in the year 2012, the Indian govt amended the finance act and stamped the tax retrospectively.