UK telecom major Vodafone Group on Friday won an international arbitration against India over retrospective tax demand of ₹20,000 crores. The Permanent Court of Arbitration in The Hague ruled that conduct of the Income Tax Department is in breach of ‘fair and equitable’ treatment. Vodafone was represented at The Hague by DMD Advocates.
Vodafone was represented at The Hague by DMD Advocates: Watch
The tribunal ruled that the Indian government’s imposition of tax liability on Vodafone is in breach of the investment treaty agreement between India and the Netherlands.
Spurred by the news, on Friday Vodafone Idea’s scrip on BSE closed 12% higher at ₹10.20.
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In 2007, Vodafone received notices from India’s tax authorities alleging that the firm had failed to deduct withholding tax in the Hutchison deal. the Supreme Court of India in January 2012 “handed down its judgement, holding that VIHBV’s interpretation of the Income Tax Act 1961 was correct, that the transaction in 2007 was not taxable in India, and that consequently, VIHBV had no obligation to withhold tax,” the statement said.
While the Supreme Court subsequently quashed the demand on January 20, 2012, the government amended its law retrospectively, putting the liability back on Vodafone Group.
On February 12, 2016, the telecom company received a notice “of an outstanding tax demand of Rs 22,100 crore (which included interest accruing since the date of the original demand)” along with a threat to confiscate Indian assets if the tax is not paid.