On Friday the Government said that it was taking into account all options; including legal recourse, in the company’s favorite case of Vodafone arbitration.
The UK Telecom Company Vodafone Group plc secured a retrospective lawsuit against the Indian administration; for demanding duty of Rs 22,100 crore. An international arbitration tribunal determined that India’s request in past taxes violates the bilateral investment security pact’s equal treatment.
In a statement; the Finance Ministry claimed that it was recently told that the award was passed against the Indian government in the case of arbitration; invoked by Vodafone International Holding BV.
“After such consultations, the government will evaluate the award and its aspects carefully in consultation with our councils and will consider all options and decide upon further course of action before relevant forums, including legal remedies,” he said.
Liability of the government will be limited to approximately RS 75 crore — Rs 30 crore in expense and another Rs 45 crore in tax refund. Before the arbitration tribunal, Vodafone had challenged India’s use of a 2012 law which granted it retrospectively powers for tax agreements such as Vodafone ‘s acquisition of $11 billion of 67 per cent of mobile telephony owned by Hutchison Whampoa in 2007.
Bilateral Investment Treaty (BIT) was contested for Rs 7,990 crore in taxes on capital gains (Rs 22,100 crore after the interest and penalty included). Sources claimed that the tax request is for the UK listed business and that there was no liability for Vodafone ‘s Indian venture. The Combinated Company Vodafone Idea Ltd has, however, faced $7.8 billion in past regulatory duities, and has merged its Indian activities into the conglomerate Kumar Mangalam Birla.
Vodafone International Holdings BV has been told by tax authorities in September 2007 that it reportedly failed to deduct the withholding tax from the consideration paid to the International Hutchison Telecom Ltd.
The Supreme Tribunal, which dismissed the transaction in January 2012, challenged Vodafone, arguing that it was not taxable in India and that it therefore had no duty to withhold tax.
Parliament adopted the Finance Act 2012 in May of that year, which amended various provisions of the Income Tax Act , 1961 in a retrospective manner, with a view to imposing any benefit on the transfer of shares of a non-Indian company derived from the Indian properties.
After having paid interest on the capital sum, the company served in January 2013 a tax notice of Rs 14,200 crore. A year later, Vodafone questioned the Dutch BIT’s tax demand.