Vodafone international Has won an arbitration court with the Indian government in its old tax dispute case. The case relates to a tax demand of Rs 22,100 crore from the company.
However, after getting the information about the decision, the government has said that it will study the decision of the arbitration court and only then will take any decision regarding further action.
The International Arbitration Tribunal on Friday ruled that India’s demand for tax from the previous date is against fair dealing under the bilateral investment protection agreement between the two countries.
Vodafone International arbitration court.
The British company said in a statement, “Vodafone confirms that the Investment Treaty Tribunal found the case in Vodafone’s favor.” This is a consensus decision which also includes an Indian-appointed arbitrator Rodrigo Oremuno. “According to the company,
After deliberations, the government will consider all options and decide on other actions, including legal remedies at the appropriate forum. Will be up to Rs. This includes a cost of Rs 30 crore and a tax refund of Rs 45 crore. Under the decision, the government has to give Vodafone 60 percent of its legal expenses and 6 in the appointment of an arbitrator One has to pay half of the cost of 000 euros.
The arbitration tribunal said that even after the decision of the Supreme Court, demanding tax from Vodafone is a violation of the guarantee of fair and equal treatment under the bilateral investment protection treaty. Vodafone Group plc had challenged in the arbitration court against the tax demand made by the Government of India under the previous date of taxation law. Had done it. Under the same law, the government had sought capital gains in a $ 11 billion deal by Vodafone to purchase a 67 percent stake in Hutchison Whampoo’s mobile phone business in India.
The deal was signed in 2007 between Vodafone and Hutchison. The company challenged the Indian government’s tax demand under the Netherlands-India Bilateral Investment Treaty (BIT) in an international arbitration court. The company was demanded Rs 7,990 crore (including interest and penalties including Rs 22,100 crore) as capital gains tax in the deal. Sources said that the tax demand was on the listed company in the UK and it has no liability on the Indian entity of Vodafone.
Vodafone Indian merged its Indian telecom operations with industrialist Kumar Mangalam Birla’s company Idea. But the company that came into existence after the merger, Vodafone Idea Ltd. Facing demand for previous government dues of $ 7.8 billion. The tax authority issued a notice to Vodafone International Holdings BV in September 2007. In the notice, the company was subjected to Hutchison
Telecommunications International Ltd. Was said to have failed to deduct the withholding tax (tax deducted at source) on payment of its stake purchase. Vodafone challenged the notice in the Supreme Court, which disposed of the case in 2012, stating that the deal was not taxed in India and that the company had no obligation to withholdholding tax.
Thereafter, in May the same year, Parliament passed the Finance Act 2012 in which the various provisions of the Income Tax Act 1961 were amended along with the tax from the previous date.