India has challenged verdict by an international arbitration court that ruled India's demand of Rs 22,100 crore in taxes from Vodafone using retrospective legislation was in "breach of the guarantee of fair and equitable treatment" in Singapore. British telecommunications company Vodafone Plc had won an arbitration case against India in September. Today was the last day to appeal against the arbitration award with regard to retrospective tax demand against Vodafone.
India has challenged the Vodafone arbitration award in Singapore on December 21, Reuters reported citing a government official. However, the government has not come out with any official statement as of now.
This comes two days after India lost another arbitration case related to a tax dispute with the UK oil major Cairn Energy Plc. The international arbitration tribunal in its verdict asked India to pay Rs 8,000 crore as damages to Cairn.
The government recently discussed the Hague-based Permanent Court of Arbitration (PCA) award in the Vodafone tax dispute case at the highest level, including Prime Minister Narendra Modi.
Solicitor General (SG) Tushar Mehta was also of the opinion that the government should contest the arbitration judgement, which overturned the I-T Department's tax demand on the ground that India was in violation of the bilateral investment treaty it inked with the Netherlands by amending the law with retrospective effect. India's current response could be based on the SG's observation that it could find a competent forum in Singapore.
He had also advised the Centre against approaching the Delhi High Court or the Supreme Court since the "seat of arbitration is Singapore and prima facie the challenge may lie in the said arbitration before the municipal court of Singapore."
The Vodafone arbitration case:
Vodafone Plc had invoked India-Netherlands bilateral investment treaty in 2013, seeking a resolution to the tax demand imposed on it by enacting a tax law with retrospective effect to sidestep a Supreme Court judgement that went in the company's favour.
Vodafone had argued that India did not have jurisdiction over the matter on account of its investment pact with the UK. It moved the ICJ in 2016, following no consensus between its and government's arbitrators in finalising a judge for resolving the tax dispute.
On the other hand, the government retaliated that it was an "abuse of the process of law". In September this year, the International Court of Justice (ICJ) had ruled the imposition of tax liability on Vodafone violated the investment treaty agreement between India and the Netherlands.