Oda arbitration case moved to S’pore court
The government’s al against a verdict of an national arbitration tribuhat overturned its demand 22,100 crore in back taxes Vodafone Group Plc has transferred to a senior t in Singapore and hearings scheduled in September, ces said. n international arbitration t had on September 25 last rejected tax authorities’ and for ₹22,100 crore in taxes and penalties relating e British telecom giant’s acquisition of an Indian ator. e government in December ied in Singapore to set aside ward primarily on jurisdicl grounds. The proceedings been transferred to a senior t, with a hearing date set for ember, two sources with wledge of the matter said. he appeal was filed in the apore court as the Southeast n nation was the seat of ration. e government has similarly lenged the order of a threeber tribunal at the Permacourt of Arbitration in The ue that asked India to return billion, plus interest and to British oil and gas comcairn Energy plc. he government had used a 2012 law, that gave tax authorities the power to reopen past cases, to seek taxes from Vodafone and Cairn over alleged capital gains made several years ago.
Both Vodafone and Cairn had challenged the tax demands under bilateral investment protection treaties and initiated the arbitration. India lost both cases.
Sources said the government believes that taxation is not covered under investment protection treaties with various countries and the law on taxation is a sovereign right of the country.
While the treaties are primarily aimed at protection of investments, the tax is levied on “returns” earned by entities.
The 2012 law, commonly referred as retrospective tax law, was enacted after the Supreme
Court in January that year rejected proceedings brought by tax authorities against Vodafone International Holdings BV for its failure to deduct withholding tax from $11.1 billion paid to the Hutchison Telecommunications in 2007 for buying out its 67% stake in a wholly-owned Cayman Island incorporated subsidiary that indirectly held interests in Vodafone India Ltd.
The Finance Act 2012, which amended various provisions of the Income Tax Act 1961 with retrospective effect, contained provisions intended to tax any gain on transfer of shares in a non-indian company, which derives substantial value from underlying Indian assets, such as Vodaone’s transaction with Hutchison in 2007.