Centre comes out with clarification on appeal in Vodafone Arbitration award case

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Award along with all options is under examination within the ministry and further course of action will be decided based on such examination, said the ministry

The Centre on Thursday rejected a report in a section of media claiming that the Attorney General gave opinion in favour of not appealing in the Vodafone Arbitration award case.

In a clarification, the Union Finance Ministry said that a speculative news story being circulated in some section of media claiming that Attorney General has  given opinion in favour of not appealing in the Vodafone Arbitration award is totally incorrect and without any factual basis.

“Award along with all options is under examination within the ministry and further course of action will be decided based on such examination,” said the ministry in a statement.

It was reported that Attorney General (AG) KK Venugopal reportedly suggested the government that India should avoid filing an appeal against the arbitration award.

In a major setback for India, an international arbitration court ruled that the government seeking Rs 22,100 crore in taxes from telecom major Vodafone using retrospective legislation was in “breach of the guarantee of fair and equitable treatment" guaranteed under the bilateral investment protection agreement between India and the Netherlands.

The dispute dates back to 2007 when Vodafone International Holding (a Netherland company) had in bought 100 percent shares of Cayman Island-based CGP Investments for $11.1 billion to indirectly get 67 percent control of Hutchison Essar - an Indian firm, reported Mint.

The Tax Department suspected that the pact was designed to avoid capital gain tax in India and so slapped a tax demand, which was rejected by the Supreme Court in 2012.

In order to stop abuse and plug the loophole of such indirect transfer of Indian assets, the government in 2012 amended the law to make such transfers taxable in India. Accordingly, Vodafone was slapped with a fresh demand which the firm contested through international arbitration.

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