An international arbitration tribunal in The Hague ruled that India’s imposition of a tax liability on Vodafone, as well as interest and fines, constituted a violation of an investment treaty between India and the Netherlands, one of the sources said.
The court, in its ruling, said the government should stop seeking Vodafone fees and should also pay 4.3 million pounds ($ 5.47 million) to the company as partial compensation for its legal costs, the said. source.
Vodafone and India’s Finance Ministry did not immediately respond to a request for comment.
The tax dispute stems from Vodafone’s acquisition of Hutchison Whampoa’s Indian mobile assets in 2007. The government said that Vodafone was required to pay taxes on the acquisition, which the company contested.
In 2012, the Supreme Court ruled in favor of the telecommunications provider, but the government later that year changed the rules to allow it to tax deals that had already been concluded.
In April 2014, Vodafone initiated arbitration proceedings against India.
India is involved in more than a dozen international arbitration cases against companies, including Cairn Energy, for retrospective tax claims and cancellation of contracts. The treasury could end up paying billions of dollars in damages if it loses.
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