Vodafone won 20 thousand crore case against the Government of India. Britain’s telecom company Vodafone has won an important case of international arbitration against the Indian government. Actually, this matter of about 20 thousand crores is about retrospective tax.
In this case, a decision has been taken in favor of Vodafone. During the hearing of the case, the tribunal has said that the tax liability imposed by the Indian government on Vodafone is a violation of the investment agreement between India and the Netherlands.
Let us tell you that the matter between the Government of India and Vodafone was about the retrospective tax of 20,000 crores. In 2016, the company moved the International Court of Justice due to lack of any agreement between Vodafone and the government. Vodafone is relieved after a long hearing.
What is the whole matter of Vodafone case with government of India
This case started in the year 2007. This was the same year that Vodafone entered India. This year Vodafone acquired Hutchinson Essar (popularly known as Hutch). Vodafone acquired 67 per cent stake in Hutchinson Essar. Vodafone had paid more than $ 11 billion for this acquisition. Hutchinson Essar was a mobile company operating in India.
The Income Tax Department had asked the company to pay taxes on the basis of capital gains, which the company refused to pay. The company’s argument was that the acquisition does not come under the tax net because the entire financial transaction in this case has not been done in India. At the same time, the Income Tax Department said that Vodafone acquired the property which was present in India.
Supreme court also gave relief
The matter went to the Supreme Court and the court ruled in favor of Vodafone. After this decision, then Finance Minister Pranab Mukherjee, presenting the budget 2012-13, proposed to amend the Income Tax Act 1961 with retrospective tax. This proposal was made so that mergers and acquisitions abroad such as Vodafone can be taxed. After this, Vodafone moved the International Court of Justice. After a long hearing in this matter, now the decision has come in favor of Vodafone once again. Let us tell you that currently Vodafone has an alliance with Idea in India. Vodafone — Idea is the third largest telecom company in the country.
The company facing AGR
decision has come at a time when Vodafone Idea Adjust Gross Revenue (AGR) is facing backlog. Actually, the telecom ministry’s AGR outstanding on Vodafone Idea is more than Rs 50 thousand crore. The company has been able to pay only a nominal amount of this outstanding. However, recently the Supreme Court has given 10 years exemption to telecom companies to repay AGR dues with conditions.