Vodafone Has The Last Laugh Over Rs 20,000 Cr Retro Tax case Against India

Fri Sep 25 2020 18:31:52 GMT+0530 (IST)

British multinational telecommunications company Vodafone Group plc got a sigh of hope after winning a significant ruling against the Indian government in an International Court in connection with over 20,000 crores in dues.



While the British multinational telecommunications company Vodafone Group plc got a sigh of hope after winning a significant ruling against the Indian government in an International Court in connection with over 20,000 crores in dues.

While hearing the case, the tribunal at the Intergovernmental organization, The Permanent Court of Arbitration in The Hague in its ruling reportedly maintained that the Indian government imposing a tax liability on the telecom company breaches the investment treaty between India and Netherlands.

In its orders, the International Court issued directives for the Indian government to reimburse 60 percent of the telecom's legal expenditure along with 50 percent of fees paid by the company to the appointing authority.

Going into detail, back in 2007, the Vodafone company acquired stakes in  Hutchison Telecom company. The then government maintained that Vodafone should pay taxes for the acquisition. However, the company refused to pay the taxes.

The Indian Revenue Department imposed a tax on Vodafone company stating that Vodafone acquiring stakes in Hutch comes under offshore transactions as bot the companies are not based out of India.

The Indian government asked the Vodafone company to pay a tax worth Rs 12,000 crore. Even the Supreme Court ruled out in favor of the telecom company.

In the year 2012, the Finance Act 2012 was passed in the Parliament. Two explanations to Section 9 of the tax law were inserted to the Finance Law thus holding the company to pay the taxes.

Following this, Vodafone initiated the arbitration proceedings against India in the year 2014. Since then the proceedings in the case are going on.