Vodafone Wins Arbitration against India for Tax Demand of Rs20,000 Crore
IANS 25 September 2020
Vodafone has won the case against India over a retrospective tax demand of more than Rs20,000 crore.
 
The Permanent Court of Arbitration at The Hague has ruled that the conduct of India's tax department is in breach of 'fair and equitable' treatment.
 
Voafone had moved the International Court of Justice (ICJ) in 2016 due to a lack of consensus between the parties' arbitrators in finalising a judge for the tax dispute.
 
Following this, a tribunal was constituted in June 2016 after Vodafone challenged India's use of a 2012 legislation that gave it powers to retrospectively tax deals like Vodafone's $11 billion acquisition of a 67% stake in Hutchison Whampoa in 2007. The retrospective tax law had been enacted after the Supreme Court judgement went in Vodafone's favour.
 
Vodafone had challenged the tax department's demand of Rs7,990 crore as capital gains taxes (Rs22,100 crore after including interest and penalty) under the Netherlands-India Bilateral Investment Treaty (BIT).
 
Buoyed by the arbitration award, Vodafone Idea stock closed 12% higher at Rs10.20.
 
In 2007, the Indian income-tax (I-T) department had slapped a demand notice on Vodafone seeking capital gains tax.
 
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Comments
mywopy
2 years ago
They can now use this windfall gain to upgrade all their current infrastructure for a quicker 5g evolution.
i_sakarwala
2 years ago
Retrospective taxation is in itself a violation of many laws which governs us. How can you tax a company for a deal done with all the required consensus and clearances and then ask them to pay taxes after so many years. This is unfair by all means and in nature vindictive.
The macro impact would be counter productive for foreign investments to come in, and also affect our companies investing abroad. We cannot become self reliant by alienating our businesses and trade with that of the world.
Meenal Mamdani
2 years ago
It is ludicrous to ask a company to pay based on a law that is being applied retroactively. This damages India's reputation as a country such that other companies will be reluctant to invest here as Indian govt may at any time apply a law retroactively to make up shortfalls in income.
shadikatyal
2 years ago
It is indeed unfortunate that India is known for more arbitrations. Why has such a climate become a norm and do we recognise that such a reputation is hurting the nation?
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