₹20,000 cr Retro Tax Case: Vodafone Wins Arbitration against India

Permanent Court of Arbitration in The Hague holds Indian Tax Authorities in Breach of Fair Treatment Doctrine

UK telecom major Vodafone Group Plc on Friday, 25 September 2020 won an international arbitration against India over retrospective tax demand of ₹20,000 crore. The Permanent Court of Arbitration in The Hague ruled that conduct of Income Tax Department is in breach of 'fair and equitable' treatment.

Vodafone was represented at The Hague by DMD Advocates.

The tribunal ruled that the Indian government's imposition of a tax liability on Vodafone is in breach of the investment treaty agreement between India and the Netherlands, Reuters reported while quoting a source.

Spurred by the news, on Friday Vodafone Idea's scrip on BSE closed 12% higher at ₹10.20.

In 2007, Indian I-T department slapped a demand notice seeking capital gains tax.

A tax demand of ₹11,000 crore was raised by the then government related to Vodafone’s $11 billion acquisition of Hutchison Telecom stake in 2009.

The government had said then, that the Hutchison-Vodafone deal was liable for tax deduction at source (TDS) under the Income Tax (IT) Act, and since Vodafone had not deducted the tax at source, the government raised the demand, which has expanded to ₹20,000 crore including interest and penalties.

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.