India challenges Vodafone arbitration ruling in Singapore – Times of India

NEW DELHI: India has challenged in Singapore an international arbitration court‘s verdict against it over a $2 billion tax claim involving Vodafone Group Plc, a senior government official told news agency Reuters on Thursday on condition of anonymity.
The issue is being watched closely after a fresh disappointment for the income tax (I-T) department in the Cairn case. It has been also ruled that the government’s retrospective action — piloted by the foreign tax division of the I-T department — violated its commitment to “fair and equitable treatment” under the bilateral investment protection treaties.

On their part, India’s revenue officials have argued that rulings by international tribunals cannot over-ride the sovereign powers of the legislature in framing tax policies.
It is pushing this argument to seek a review of the Vodafone ruling in Singapore, pointing to a case involving an African country’s battle with global mining giants.
Companies that have been affected by the retrospective tax, however, have argued that they are not questioning the government or the legislature’s powers but are instead seeking redressal given that India has not honoured its commitment under bilateral treaties.
The government has denounced the introduction of a retrospective tax amendment in 2012 by the previous Congress government as tax terrorism.
The tax dispute, which involves interest in penalties, started with Vodafone’s acquisition of the Indian mobile assets from Hutchison Whampoa in 2007. The government said Vodafone was liable to pay taxes on the acquisition, which the company contested.
In September, UK’s Vodafone Group won an international arbitration against the demand of Rs 22,100 crore in taxes.
(With inputs from agencies)