Vodafone wins international arbitration against India in tax dispute case
By MYBRANDBOOK
Vodafone Group Plc has won an international arbitration case against the Indian government in a tax dispute, according to two sources with direct knowledge of the matter. The tribunal ruled that the Indian government's imposition of a tax liability on Vodafone is in breach of the investment treaty agreement between India and the Netherlands, one of the sources said.
Vodafone won a significant ruling against the Indian government in an international court over ₹ 20,000 crore in dues which it had described as unfair. The tribunal, in its ruling, said the government must cease seeking the dues from Vodafone and should also pay over ₹ 40 crore to the company as partial compensation for its legal costs, the source said.
"Vodafone has finally got justice. The government of India came with a retrospective amendment trying to recover the tax which the Supreme Court had struck down... The tribunal has today said that this action is violative of the bilateral investment treaty," Anuradha Dutt, managing partner of DMD Advocates, a New Delhi-based firm which argued for Vodafone.
Government sources said that tribunal's ruling meant that "no damages have been awarded against Government of India" but conceded that they will have to pay about ₹ 40 crore which is 60 percent of the tribunal's administrative cost while the rest 40 per cent would be borne by Vodafone.
"Also, Government of India may have to refund the tax collected, which is about ₹ 45 crore, only if it does not go for appeal against the award. Therefore, the total outgo would be around ₹ 85 crore only.
It is learnt that the award is under study by Indian authorities and its legal counsels who would seek suitable legal remedies at appropriate forums," sources said.
The tax dispute involving ₹ 12,000 crore in interest and ₹ 7,900 crore in penalties stems from Vodafone's acquisition of the Indian mobile assets from Hutchison Whampoa in 2007. The government said Vodafone was liable to pay taxes on the acquisition, which the company contested.
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