Finance Ministry Denies Reports Of AG Not Favouring Appeal Against Vodafone Award; Says 'All Options Under Examination'

The Union Ministry of Finance has denied reports of the Attorney General for India not favouring the filing of appeal against the international arbitration award in the Vodafone case.

The Ministry termed such reports reports "speculative", "totally incorrect" and "without any factual basis".

"Award along with all options are under examination within the Ministry and further course of action will be decided on the based on such examination", said a statement issued by the Ministry.

The issue relates to the award passed by the Permanent Court of Arbitration at Hague on September 25 favouring Vodafone group in a retrospective tax dispute of over Rs 20,000 crores with the Government of India.

The Permanent Court of Arbitration at the Hague ruled that the Indian government's tax demand on Vodafone is in breach of the investment treaty agreement between India and the Netherlands.

The case pertains to the tax demand of Rs 12,000 crore made by the Income Tax department from the international telecom giant with respect to its acquisition of the Indian assets of Hutchison Whampoa in 2007. The department contended that though the agreement between Vodafone and Hutch was executed outside India, since it related to assets in India, Vodafone was liable to make Tax Deduction at Source with respect to the consideration paid to Hutch.

While the Bombay High Court upheld the tax demand, the Supreme Court, in 2012, reversed that verdict and absolved Vodafone of the tax liability.

To overcome the verdict, the Central Government brought an amendment to the Income Tax Act later that year, with retrospective effect.

Following a fresh tax demand on the basis of the amended law, Vodafone moved the arbitration tribunal in 2014, invoking the India-Netherlands bilateral investment treaty of 2013.

The tribunal, in its ruling, said the government must cease seeking the dues from Vodafone and should also pay over ₹ 40 crore to the company as partial compensation for its legal costs, reported the NDTV.