In Vodafone Tax Dispute, a New Appeal in Supreme Court

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NDTV Profit Desk
Written by

NDTV Profit Desk

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A Public Interest Litigation or PIL says the top court should order an end to the arbitration process and ask the government to recover dues. The Supreme Court has not yet decided whether it will hear the petition.
In May, Vodafone Group Plc began an international arbitration against the Indian government, toughening its stance in a long-running dispute that has dented foreign investor sentiment for India.
The British mobile phone operator's talks with the Indian government failed to find a solution last year.
The tax dispute stems from Vodafone's acquisition of Indian mobile assets from Hutchison Whampoa in 2007. The deal made the British company India's largest overseas corporate investor.
In 2012, India's Supreme Court ruled that Vodafone was not liable for payment of any tax on the acquisition. The Indian government later that year changed the rules to enable it to tax deals that had already been concluded.
Vodafone rejected the tax claim and said that, even if tax was due, it should be paid for by the seller rather than the buyer.
Vodafone's Indian mobile services business is the country's second-biggest by users and revenue.
The international arbitration proceedings will take place under a bilateral investment agreement.
In April this year, Vodafone took full ownership of its India unit after buying the 15.5 per cent it did not already own.
Uncertainties over policy in India have unsettled investors, and tax claims on foreign companies have been a major concern. IBM Corp, Royal Dutch Shell Plc and Nokia Oyj are among foreign firms contesting local tax claims.