Vodafone draws battle lines with Indian government

VODAFONE HAS begun a legal battle with the Indian government over the retrospective tax legislation included in the Indian Finance Bill 2012.

The claim, served by the group’s Dutch subsidiary Vodafone International, is the first step required before a decision can be given under the bilateral investment treaty (BIT) between India and the Netherlands.

The proposed legislation could reverse a $2.2bn (£1.38bn) legal victory for the telecoms giant won in January, which saw the Indian taxman repay Vodafone $500m after a five-year dispute.

The clash is rooted in Vodafone’s acquisition of Hutchison Whampoa’s Indian mobile assets for $11.2bn. The Indian authorities had argued the deal was tax-liable in India.

Legal amendments would allow India to start new proceedings against the firm in what Vodafone describes as “violations of the international legal protections granted to Vodafone and other investors in India”.

In a statement on its website, Vodafone said: “The retrospective tax proposals amount to a denial of justice and a breach of the Indian government’s obligations under the BIT to accord fair and equitable treatment to investors.

“Vodafone has asked the Indian government to abandon or suitably to amend the retrospective aspects of the proposed legislation as Vodafone would prefer to reach an amicable solution to this matter.”