InvestorQ : Does the judgment of the IAT in the Vodafone case put an end to the retrospective tax issue?
shrinidhi Rajan made post

Does the judgment of the IAT in the Vodafone case put an end to the retrospective tax issue?

Answer
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1 month ago


With the International Arbitration Tribunal ruling in favour of Vodafone in the $2 billion tax recovery case, the Finance Ministry has gone into a huddle with its legal experts to decide the next course of action. The bigger question is what this means for other cases?

The tribunal has not awarded any damages against the government of India barring a small payment of £4.3 million that the government has to make to Vodafone towards administrative costs. But the real worry is what happens to other similar cases.

The whole issue pertains to the issue of retrospective taxation wherein a transaction is taxed retrospectively for an amendment that happened later. In this case, the GAAR amendment happened in 2012 which was applied to the 2007 Vodafone deal.

There are similar outstanding cases with Cairn PLC and Vodafone International also and if the government does not wish to go on appeal, it may have to forfeit those cases also. The real issue is whether the government would want to be seen as vindictive at a time when it is betting heavily on Make in India.