Vodafone judgment: Govt asked to pay only Rs 40 crore, not Rs 20,000 crore

The international arbitration tribunal, which has delivered a verdict in favour of Vodafone in a retrospective tax dispute, has ordered the Indian government to pay only Rs 40 crore to the telecom giant and not Rs 20,000 crore, the sources in the Centre said on Friday.

The government sources said that contrary to some media reports suggesting that the government has been ordered to pay Rs 20,000 crore to Vodafone, the amount is just Rs 40 crore.

“There is the wrong impression that the government will have to return Rs 20,000 crore because of this judgment. However, the government has been asked to pay only 4.3 million pounds, ie, about Rs 40 crore. This is equal to 60 per cent of the tribunal’s administrative cost while the rest 40 per cent of the cost would be borne by the Vodafone,” the sources told India Today TV.

Additionally, if the government decides not to appeal the judgment, it may have to return the tax collected from the telecom firm, which is about Rs 45 crore. Thus, the total outgo would be around Rs 85 crore only, the sources said.

“The verdict is under study by the Indian authorities and legal counsels who would seek suitable legal remedies at appropriate forums,” they said.

An international arbitration tribunal in The Hague on Friday ruled in favour of Vodafone Group Plc in a Rs 20,000 crore retrospective tax dispute. The tribunal ruled that India’s imposition of tax liability on Vodafone, as well as interest and penalties, were in a breach of an investment treaty agreement between India and the Netherlands.

The tribunal also directed the Indian government to pay Vodafone 4.3 million pounds as partial compensation for legal costs.

Vodafone’s tax dispute stems from its $11 billion deal to buy 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 2012, the Supreme 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.

In 2014, Vodafone initiated arbitration proceedings against India. ANI