India has challenged an international arbitration tribunal ruling in Singapore against a $ 2 billion tax claim in which Vodafone Group Plc has a stake. This development is due to the government losing international arbitration against Vodafone in September over a $ 2 billion retroactive tax dispute.
The international arbitration tribunal in The Hague ruled that the Indian government’s imposition of a tax liability on Vodafone violated the investment agreement between India and the Netherlands.
The tribunal ruled that the government should stop charging Vodafone and pay the company more than 40 billion rupees as part of its legal fees.
The tax dispute, which includes Rs 12,000 interest and Rs 7,900 in penalties, is due to Vodafone’s acquisition of Indian cellular assets from Hutchison Whampoa in 2007. The government said Vodafone was required to pay taxes on the acquisition, which the company denied.
In 2012, India’s highest court ruled in favor of the telecommunications provider, but the government changed the rules later that year to tax deals that had already been made.
Vodafone initiated arbitration proceedings against India in April 2014.
India is involved in more than a dozen international arbitrations against companies like Cairn Energy relating to retrospective tax claims and contract termination.