Vodafone wins Rs 2,100 crore tax case against Indian government

(PTI) New Delhi, Dt

British telecom giant Vodafone Group has won a Rs 2,100 crore retrospective tax arbitration case against the Indian government. The International Arbitration Tribunal has said in its judgment that India's tax department has not acted impartially and fairly. The tax levied on Vodafone by the Government of India is a violation of the Investment Treaty between India and the Netherlands.

The company had approached the International Court of Justice in 2012 without any agreement between Vodafone and the government. Where the verdict was given in his favor today.

The Vodafone Group, meanwhile, said in a statement that it had "studied the International Court of Justice's ruling" but was "convinced" it was in its favor. At this stage it is not appropriate to comment further. On the other hand, no statement has been issued by the Government of India so far regarding this verdict.

According to sources close to the case, the liability of the Government of India will be limited to Rs 3 crore, which includes a cost of Rs 50 crore and a tax refund of Rs 2 crore.

Vodafone bought a 7% stake in Hutchison Essar, a mobile business owned by Hutchison Hampoa, owner of the Hutchison Group in Hong Kong, in 2009 for 11 billion. Vodafone bought the stake through its own companies based in the Netherlands and the Cayman Islands.

The Indian government had demanded a capital gains tax from Vodafone in connection with the agreement. Vodafone was asked to pay a retrospective tax when it agreed to pay capital gains tax. The company then filed a case in the Supreme Court against the Indian government's demand. The Supreme Court also ruled in favor of Vodafone in 2014. The apex court said that since the agreement was not taxable in 2006, it could no longer be taxed.

However, the government then dropped the retrospective tax through the Finance Act, 2016. The government enacted a law in 2013 that would make the 2006 agreement between Vodafone and Hutchison taxable.

Vodafone said on January 3, 2016 that it had been asked to pay Rs 12,800 crore in taxes. It had principal and interest but did not include any penalty. The verdict was challenged on January 10, 2015. On February 17, 2016, Vodafone received a tax notice of Rs 2,100 crore from the Income Tax Department and threatened to confiscate its assets in India if it did not pay taxes. Following the ruling, shares of Vodafone Idea rose 19.15 per cent to close at Rs 10.50.