The Supreme Court will today hear the Centre's plea against an order of the Delhi High Court that allowed arbitration in the Vodafone tax case.
The matter is being heard by a bench headed by Chief Justice Dipak Misra.
Earlier on October 26, the Delhi High Court allowed the Vodafone Group to go ahead with arbitration proceedings against India, under a treaty with the United Kingdom, in connection with a Rs. 11,000-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.
However, in an interim order of August, the high court restrained the group or its subsidiaries from going ahead with arbitration under the India-UK Bilateral Investment Protection Agreement (BIPA) as the company 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 Rs. 11,000 crore, which was subsequently quashed by the apex court on January 20, 2012.
The government later made a retrospective amendment to the Income Tax Act which re-fastened the liability on Vodafone. This aggrieved the firm and the Vodafone International Holdings BV invoked the arbitration clause under BIPA between India and Netherlands.