The Hague international tribunal ruled that India's imposition of tax liability on Vodafone were in breach of an investment treaty agreement.
India has challenged in Singapore an international arbitration court’s verdict against it over a $2 billion tax claim involving Vodafone Group Plc, a senior government official told Reuters on Thursday on condition of anonymity.
What was the case?
Vodafone Group had in September won an international arbitration case against the Indian government, ending one of the most high-profile disputes in the country involving over ₹ 20,000 crore in dues which it had described as unfair. 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 breach of an investment treaty agreement between India and the Netherlands, two sources with direct knowledge of the matter said. India had 90 days to appeal the ruling.
India’s finance ministry did not immediately reply to an email and message seeking comment on the story.
India to reimburse only Rs 40 crore
Contrary to the belief, the international arbitration tribunal in The Hague has ordered the Indian government to pay only Rs 40 crore to the telecom giant and not Rs 20,000 crore, according to government sources.
"There is the wrong impression that the government will have to return Rs 20,000 crore because of this judgment. However, the government has been asked to pay only 4.3 million pounds, ie, about Rs 40 crore. This is equal to 60 per cent of the tribunal’s administrative cost while the rest 40 per cent of the cost would be borne by the Vodafone," sources said.
India lost another international arbitration case this week, against Cairn Energy, over a tax dispute. It has been ordered to pay the UK-listed company over $1.2 billion in damages and costs.
India is expected to challenge this ruling too given the size of the award, said the senior government official, who did not want to be named as the decision was not public yet.
India has faced a string of arbitrations by investors including Deutsche Telekom, Nissan Motor Co, Vodafone and Cairn Energy over issues ranging from retrospective taxation to payment disputes.
(With Reuters inputs)
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