Telecommunication giant Vodafone Group Plc won an international arbitration against India in a tax dispute of over ₹20,000 crores, on Friday. The Permanent Court of Arbitration in The Hague ruled that conduct of the Income Tax Department breaches the ‘fair and equitable’ treatment.
The international arbitration tribunal in The Hague declared that the tax liability by the government of India and also the interest and penalties imposed on Vodafone breaches the investment treaty agreed between India and the Netherlands, according to the sources of Reuters.
The tribunal also ruled that the government of India must cease seeking the dues from British telecommunication company and also pay 4.3 million pounds (₹ 40.3 crore) to the company as a partial legal recompense, the Reuters source said.
Vodafone was represented at The Hague by DMD Advocates, a New Delhi based firm. “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,” said Anuradha Dutt, managing partner of DMD Advocates, according to NDTV.
The tax dispute of ₹ 12,000 crore in interest and ₹ 7,900 crore in penalties started when Vodafone purchased the Indian mobile assets from Hutchison Whampoa in 2007. The government said Vodafone was liable to pay taxes on the acquisition, which the company argued against.
In 2012, the Supreme Court of India ruled in favour of the British telecom company but later that year the government changed the rules to enable it to tax deals that had already been concluded. Two years later in 2014 Vodafone initiated arbitration proceedings against India, which got settled today. The legal victory saw Vodafone Idea’s shares jump 15 per cent.