Budget 2020

Vodafone to continue arbitration on tax dispute 

Our Bureau New Delhi | Updated on March 12, 2018 Published on July 10, 2014


Vodafone Plc said it will continue the process of international arbitration against the Government. 

"We note the Finance Minister’s announcement that existing cases arising from the 2012 retrospective tax law should follow the lawful process in which they are currently being adjudicated. Vodafone will, therefore, continue the process of international arbitration initiated under the India-Netherlands Bilateral Investment Treaty," Vodafone said after the Finance Minister's  Budget speech. 

The Finance Minister said the sovereign right of the Government to undertake retrospective legislation is unquestionable. However, this power has to be exercised with extreme caution and judiciousness keeping in mind the impact of each such measure on the economy and the overall investment climate. This Government will not ordinarily bring about any change retrospectively which creates a fresh liability.

“Consequent upon certain retrospective amendments to the Income Tax Act 1961 undertaken through the Finance Act 2012, a few cases have come up in various courts and other legal fora. These cases are at different stages of pendency and will naturally reach their logical conclusion. At this juncture I would like to convey to this August House and also the investor community at large that we are committed to providing a stable and predictable taxation regime that would be investor-friendly and spur growth.

Keeping this in mind, we have decided that henceforth, all fresh cases arising out of the retrospective amendments of 2012 in respect of indirect transfers and coming to the notice of the Assessing Officers will be scrutinised by a High Level Committee to be constituted by the CBDT before any action is initiated in such cases. I hope the investor community both within India and abroad would repose confidence on our stated position and participate in the Indian growth story with renewed vigour," Arun Jaitley said. 

Vodafone said it has maintained that there was no tax to pay — a view upheld by India’s Supreme Court — and the retrospective law in any case concerned tax on the gain made by Hutchison: Vodafone, as the buyer, clearly made no capital gain whatsoever. “The notion of a retrospective withholding obligation is both unjust, and — as noted in the Shome Report — constitutes “imposition of a burden of impossibility of performance,” Vodafone said. 

Published on July 10, 2014
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