Vodafone Group Plc taxation issue: ‘Invoking BIT to reject govt’s right to tax seems questionable’

In a relief for Vodafone Group Plc, the Permanent Court of Arbitration at The Hague ruled last month that India’s retrospective demand of Rs 22,100 crore as capital gains and withholding tax imposed on the telco for a 2007 deal was “in breach of the guarantee of fair and equitable treatment” that the company was entitled for its investments in the country’s mobile telephone business.

The Finance Ministry had then said it would study the order “and all its aspects carefully in consultation” with its counsel. “After such consultations, the government will consider all options and take a decision on further course of action including legal remedies before appropriate fora,” it said in a statement. “The property and assets is question are being bought and sold in India even though transaction happened overseas, we have the right into look into its nuances,” they said. The Vodafone Group retrospective taxation case dates back to 2007 when the then UPA government had raised an initial tax demand of Rs 7,990 crore in capital gains and withholding tax against Vodafone Group when the firm had acquired 67 per cent of stake in Hutchison Whampoa for $11 billion.