Telecom giant Vodafone on Friday won a significant ruling against the Indian government in an international court over Rs 20,000 crore in dues which it had described as unfair.
Vodafone was represented at The Hague by DMD Advocates. Arbitration at Hague has ruled that the conduct of India’s tax department is in breach of “fair and equitable” treatment.
Observing that the retrospective taxation despite the Supreme Court’s judgment in favor of Vodafone was in breach of the bilateral investment treaty, the court has directed India to reimburse a sum of Rs 40.3 crore (GBP 4.3 Million) to Vodafone.
India had claimed a total of ₹279 billion ($3.79 billion), including about $2 billion in tax, as well as interest and penalties, one of the sources said.
Vodafone said in a statement the amount of the award was confidential. Shares in the company’s India unit, Vodafone Idea , ended 13% higher on Friday.
“The tribunal held that any attempt by India to enforce the tax demand would be a violation of India’s international law obligations,” Vodafone said in its statement.
India’s Finance Ministry said it would carefully study the award, together with its lawyers. “After such consultations, the government will consider all options and take a decision on further course of action including legal remedies,” the Ministry said in a statement.
“Vodafone has finally got justice, first from the Indian Supreme Court and now from an international arbitral tribunal,” said Anuradha Dutt, senior partner at DMD Advocates, an Indian law firm representing the company.
The ruling brings an end to one of the most controversial disputes in India under international treaty agreements that it enters into with countries to protect foreign investments.
In 2012, India’s top court ruled in favour of the telecom provider but the government changed the rules to enable it to tax deals that had already been concluded.