The government and the Vodafone Group Plc have decided to select Abdulqawi Ahmed Yusuf, vice-president of the International Court of Justice, to be the third arbitrator in the Rs 200 billion tax dispute. This however will be finalised only after receiving the consent of the proposed arbitrator.
Both the sides reached an agreement on the third arbitrator, after a delay of about eight months. The arbitration is likely to take place outside India and the UK as Vodafone had invoked an India-UK treaty. The tax department is likely to issue its final notice to Vodafone soon.
The dispute started when Indian tax authorities imposed principal tax liability of about Rs 80 billion on Vodafone over its $11-billion payment to Hutchison Telecommunications International for the acquisition of Hutchison Essar (now called Vodafone India) in 2007. While the Supreme Court ruled in favour of Vodafone in January 2012, the then government amended tax laws with retrospective effect to claim tax dues plus add-on penalties amounting to Rs 200 billion.
