Vodafone 2nd arbitration: Supreme Court allows appointment of chairman

The Supreme Court today allowed the appointment of presiding arbitrator/chairman in the second arbitration initiated by Vodafone against India.

Supreme Court of India (Photo | PTI)

NEW DELHI: The decade-old taxation feud between the central government and telecom major Vodafone came to a turning point on Thursday with the Supreme Court allowing the British telco to initiate a second arbitration process under an India-UK investment pact.

The apex court had allowed the appointment of presiding arbitrator/chairman in the second arbitration initiated by Vodafone against India in connection with a tax demand of Rs 11,000 crore through a retrospective law of 2012.

A bench of judges A K Sikri and Ashok Bhushan, however, said the second tribunal would not start proceedings in the matter till the Delhi High Court decides it by January 10, 2018.

The Centre had filed a plea challenging the Delhi High Court order on October 26, which allowed the Vodafone Group to go ahead with arbitration proceedings against India under a treaty with the UK.

The government is of the view that Vodafone had not deducted tax at the source, so it is liable to pay Rs 11,000 crore when the telecom giant acquired stakes of Hutchinson Telecommunications International Limited (HTIL) in Hutchinson Essar Limited (HEL) at a sum amount of $11 billion.

The demand was subsequently quashed by the Supreme Court on January 20, 2012. Thereafter, the government made a retrospective amendment to the Income Tax Act, which re-fastened the liability on Vodafone.

Vodafone, whose local unit is the second largest telecom player in the country, has repeatedly said that it is not liable to pay any tax over the Hutchison acquisition.

Govt’s long battle

The govt is of the view that Vodafone has not deducted tax at source, when Vodafone acquired stakes in Hutchinson Essar Limited for $11 billion. The gover-nment’s demand was quashed by SC on January 20, 2012