London : An international arbitration tribunal in February next year will begin trial on Vodafone’s challenge to India using a retrospective legislation to seek Rs 22,100 crore in taxes, the British firm said on 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 USD 11-billion acquisition of 67 per cent stake in the mobile-phone business owned by Hutchison Whampoa in 2007.
Vodafone 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 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 2019,” it said.
Originally, Vodafone had in August/September 2007 received notices from the Indian tax authority alleging the firm had failed to deduct withholding tax in the Hutchison deal, reports PTI.
The firm challenged the notice and the Supreme Court in January 2012 “handed down its judgement, holding that VIHBV’s interpretation of the Income Tax Act 1961 was correct, that the transaction in 2007 was not taxable in India, and that consequently, VIHBV had no obligation to withhold tax,” the statement said.