Permanent Court of Arbitration rules against Indian government in the Vodafone tax case (Read DECISION)

The Permanent Court of Arbitration (PCA) at The Hague has ruled in favour of Vodafone with respect to the Indian government's retrospective tax claim of approximately USD 5.5 billion together with penalty and interest (Approximately Rupees 40,000 Crores in today's conversion rates) stemming from the company's acquisition of the Indian assets of Hutch back in 2007..While doing so, the Tribunal has held that Vodafone is entitled to fair and equitable treatment under the Bilateral Investment Treaty (BIT) signed between India and The Netherlands.It is further noted that the Indian government's insistence on the Rs. 40,000 crore claim, despite the Supreme Court's 2012 judgment, was in breach of the terms of the BIT. The award states,."The Respondent's conduct in respect of the imposition on the Claimant of an asserted liability to tax notwithstanding the Supreme Court Judgment is in breach of the guarantee of fair and equitable treatment laid down in Article 4(1) of the Agreement, as is the imposition of interest on the sums in question and the imposition of penalties for non-payment of the sums in question."Permanent Court of Arbitration.The Tribunal has also directed the Indian government to pay Vodafone an excess of 4 million pounds, being 60% of the company's costs for legal representation and assistance..Commenting on the development, Anuradha Dutt, who was part of the team that appeared for Vodafone said, "Vodafone got justice from Indian Supreme Court and now second time over from an international tribunal.".In 2012, the Supreme Court had held that the tax department had no jurisdiction to impose obligations on Vodafone for a transfer of shares of a foreign company between two non-residents.Thereafter, Parliament retrospective amendments to the Income Tax Act, which in effect rendered the 2012 Supreme Court judgment ineffective. Thus, Vodafone's tax liability, as well as penalties and interest on the same, were upheld..This prompted Vodafone to invoke the Netherlands-India BIT for wrongful actions of the Indian government..Senior Counsel Harish Salve was the Indian counsel representing Vodafone before the PCA. He was assisted by a team from DMD Advocates comprising Anuradha Dutt, Feresthe Sethna, Haaris Fazili and Kunal Dutt..The Government was represented by an American law firm Curtis Mallet led by George Kahale.