Vodafone has won arbitration against India over the government’s retro tax demand of Rs 20,000 crore at the Permanent Court of Arbitration in Hague on Friday. The Hague Court in its ruling said that the conduct of the Indian tax department is in breach of “fair and equitable” treatment.
Vodafone was represented at the Hague by DMD Advocates, seeking protection from the retro tax demand through arbitration under the India-Netherlands Bilateral Investment Protection Agreement.
The Arbitration Tribunal has directed the Indian Tax Department to cease the conduct on the question. A failure to comply will engage its international responsibility.
Vodafone is facing tax claims and interest totalling more than Rs 20,000 crore in India, including Rs 14,200 crore for acquiring Hutchison’s stake in 2007.
The UPA government had said that the Hutchison-Vodafone deal was liable for tax deduction at source under the Income Tax Act. While the Supreme Court subsequently quashed the demand in January 2012, the governemnt amended the IT act retrospectively, putting the liability back on Vodafone Group.The company in 2017 said an international tribunal would begin trial on the telco’s challenge to India’s retrospective legislation to seek more than Rs 20,000 crore in taxes.