India has time till Dec-end to appeal against Voda Group arbitration award

Topics Vodafone

The Indian government has time till the last week of December to appeal against the verdict of an arbitration panel that scrapped levy of Rs 22,100 crore tax on the UK-based telecom firm Vodafone Group Plc using a retrospective law.

Finance Secretary Ajay Bhushan Pandey, refusing to be drawn into discussion on former Finance Minister Arun Jaitley's promise to honour awards in retrospective tax cases, said the government is examining all aspects to arrive at a decision on whether to appeal against the Voda award.

"We are still examining various aspects and a decision would be taken in due course," Pandey told PTI.

Asked if there is a time limit on the decision to file an appeal, Pandey said, "All arbitration orders if at all have to be appealed, have a time limit of 90 days. So, we have time to decide, so will decide."

Jaitley as the Finance Minister of Modi-1.0 government on several occasions had stated that the BJP government will not raise any new demand using the retrospective tax legislation and will honour arbitration awards in cases where companies had challenged tax demands raised by the previous regime using the controversial retrospective tax legislation.

Vodafone had challenged before the arbitration tribunal India's usage of a 2012 legislation that gave the government powers to retrospectively tax deals like Vodafone's USD 11-billion acquisition of 67 per cent stake in the mobile phone business owned by Hutchison Whampoa in 2007.

It challenged the demand of Rs 7,990 crore in capital gains taxes (Rs 22,100 crore after including interest and penalty) under the Netherlands-India Bilateral Investment Treaty (BIT).

The arbitration tribunal had said India's "conduct in respect of the imposition" of tax demand on Vodafone "notwithstanding the Supreme Court judgement is in breach of the guarantee of fair and equitable treatment" in the bilateral investment protection treaty.

As per the award, the government has to reimburse Vodafone 60 per cent of its legal costs and half of the 6,000 euros cost borne by Vodafone for appointing an arbitrator on the panel. Sources said the Government of India's liability will be restricted to about Rs 75 crore in cost refunds.

Dear Reader,

Business Standard has always strived hard to provide up-to-date information and commentary on developments that are of interest to you and have wider political and economic implications for the country and the world. Your encouragement and constant feedback on how to improve our offering have only made our resolve and commitment to these ideals stronger. Even during these difficult times arising out of Covid-19, we continue to remain committed to keeping you informed and updated with credible news, authoritative views and incisive commentary on topical issues of relevance.

We, however, have a request.

As we battle the economic impact of the pandemic, we need your support even more, so that we can continue to offer you more quality content. Our subscription model has seen an encouraging response from many of you, who have subscribed to our online content. More subscription to our online content can only help us achieve the goals of offering you even better and more relevant content. We believe in free, fair and credible journalism. Your support through more subscriptions can help us practise the journalism to which we are committed.

Support quality journalism and subscribe to Business Standard.

Digital Editor

Business Standard is now on Telegram.
For insightful reports and views on business, markets, politics and other issues, subscribe to our official Telegram channel