Vodafone wins international arbitration against India, govt asked to pay only Rs 40 crore

WION Web Team New Delhi, Delhi, India Sep 25, 2020, 08.27 PM(IST)

A man walks past a Vodafone store. Photograph:( Getty )

Story highlights

India had claimed a total of 279 billion rupees ($3.79 billion) including about $2 billion in tax, as well as interest and penalties.

Vodafone Group Plc said on Friday it had won an international arbitration case against the Indian government.

India had claimed a total of 279 billion rupees ($3.79 billion) including about $2 billion in tax, as well as interest and penalties.

According to Reuters, an international arbitration tribunal in The Hague ruled that India's imposition of a tax liability on Vodafone, as well as interest and penalties, were in a breach of an investment treaty agreement between India and the Netherlands.

The tribunal, in its ruling, said the government's demand is in breach of "fair and equitable treatment" and it must cease seeking the dues from Vodafone. It also directed India to pay 4.3 million pounds ($5.47 million or Rs 40 crore) to the company as compensation for its legal costs -- and not Rs 20,000 crore, the sources in the Centre said on Friday.

Vodafone said in a statement the amount of the award was confidential. Shares in the company's India unit, Vodafone Idea, ended 13% higher on Friday.

"The tribunal held that any attempt by India to enforce the tax demand would be a violation of India's international law obligations," Vodafone said in its statement.

India's finance ministry said it will carefully study the award, together with its lawyers.

The government will consider all options and take a decision on further course of action including legal remedies, the ministry said in a statement.

The ruling brings an end to one of the most controversial disputes in India under international treaty agreements that it enters into with countries to protect foreign investments.

Vodafone's tax dispute stems from its $11 billion deal to buy the Indian mobile assets from Hutchison Whampoa in 2007. The government said Vodafone was liable to pay taxes on the acquisition, which the company contested.

In 2012, India's top court ruled in favour of the telecom provider but the government changed the rules to enable it to tax deals that had already been concluded.

In 2014, Vodafone initiated arbitration proceedings against India.

(with inputs from agencies)

Read in App