press trust of india
London, Nov 14: An international arbitration tribunal in February next will begin trial on Vodafone’s challenge to India using a retrospective legislation to seek Rs22,100 crore in taxes, the British firm said Tuesday.
The tribunal headed by Sir Franklin Berman was constituted in June 2016 after Vodafone challenged India using a 2012 legislation that gave it powers to retrospectively tax deals like Vodafone’s $11-billion acquisition of 67 per cent stake in the mobile-phone business owned by Hutchison Whampoa in 2007.
Vodafone challenged the demand of Rs7,990 crore in capital gains taxes (Rs22,100 crore after including interest and penalty) under the Netherlands-India Bilateral Investment Treaty (BIT).
“The Indian Government has raised objections to the application of the treaty to Vodafone International Holdings BV’s (VIHBV’s) claims and to the jurisdiction of the tribunal under the Dutch BIT,” the company in its half-yearly earning statement.
The three-member arbitration tribunal decided to “try the jurisdictional objections along with the merits of VIHBV’s claim in a trial now scheduled for February 2018,” it said. Originally, Vodafone had in 2007 received notices from the Indian tax authority alleging the firm had failed to deduct withholding tax in the Hutchison deal.