The Supreme Court on Monday agreed to hear the centre’s appeal against an order of the Delhi high court that allowed arbitration in a tax dispute under the India-UK bilateral treaty.
The matter was mentioned before a bench headed by Chief Justice Dipak Misra, who said that it will be taken up for hearing on Tuesday.
On 26 October, the Delhi high court had allowed Vodafone Group Plc to go ahead with arbitration proceedings against India, under a treaty with the UK, in connection with a Rs11,000-crore tax demand raised against the firm in relation to its $11-billion deal for acquiring a stake in Hutchinson Telecom, which held the group’s Indian assets.
Justice Manmohan had held that the parties were free to participate in the proceedings for appointing a presiding arbitrator.
In an interim order of August, justice Manmohan had restrained Vodafone Group or its subsidiaries from going ahead with arbitration under the India-UK Bilateral Investment Protection Agreement (BIPA) as the firm had initiated similar proceedings on the same issue under the India-Netherlands BIPA.
The court noted, that the government was of the view the $11 billion acquisition of stake in Hutch by Vodafone was liable for tax deduction at source under the Income Tax Act. As Vodafone had not deducted tax at source, the government had raised the demand of Rs11,000 crore, which was subsequently quashed by the apex court on 20 January 2012, the high court said.
Thereafter, the government made a retrospective amendment to the Income Tax Act which re-fastened the liability on Vodafone, the high court order noted.
Aggrieved by the imposition of tax, Vodafone International Holdings BV invoked the arbitration clause under BIPA between India and Netherlands.Vodafone tax dispute case: SC agrees to hear Centre’s plea against HC order.
As carried in LM