As per industry sources, the government is weighing its legal options in context of the international tax arbitration case against Vodafone, that the government recently lost. The government aims to limit the damages not just in the Vodafone case but also in other legal disputes such as the lawsuit with Cairn Energy, if the case goes against it.
Earlier in September 2020, an international arbitration court ruled that the Indian government seeking Rs 221 billion in taxes from Vodafone using retrospective legislation was in violation of the guarantee of fair and equitable treatment guaranteed under the bilateral investment protection pact between India and the Netherlands.
As per sources, the government will soon take the decision, after taking legal opinion, on challenging the award before a court in Singapore.
While the cost implication for the government in the Vodafone case is Rs 850 million, if a separate arbitration involving UK’s Cairn Energy also place a demand for Rs 102.47 billion in taxes using the same retrospective legislation as illegal, the government will have to pay Cairn as much as Rs 110 billion.