India has challenged in Singapore an international arbitration court’s verdict against it over a $2 billion tax claim involving Vodafone Group Plc, according to sources. This development comes after the government lost an international arbitration case against Vodafone in September.
The international arbitration tribunal at Hague had ruled that the Indian government’s imposition of tax liability on Vodafone was in breach of the investment treaty agreement between India and the Netherlands.
The tribunal, in its ruling, had said the government must cease seeking dues from Vodafone and pay more than Rs 40 crores to the company as partial compensation for its legal costs.
The tax dispute, which involves the interest of Rs 12,000 crores and Rs 7,900 crores in penalties, stems from Vodafone’s acquisition of 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 had ruled in favor of the telecom provider but the government changed the rules later that year enable it to tax deals that had already been concluded.
Vodafone initiated arbitration proceedings against India In April 2014.
India is entangled in more than a dozen international arbitration cases against companies, including Cairn Energy, over retrospective tax claims and cancellation of contracts.