Govt gives Vodafone time to find third arbitrator in tax case

The union government and Vodafone Plc have mutually agreed to extend the deadline for appointment of a third arbitrator to resolve the Rs20,000 crore tax dispute with the UK-based telecom major.

"Our arbitrator and Vodafone have mutually agreed to extend deadline for appointment of third arbitrator," a government official said. The last date for finalising the name of third arbitrator in the Vodafone case dispute is 17 September.

Following an arbitration notice by Vodafone in the retrospective tax case, the government had appointed former Chief Justice of India R C Lahoti as its arbitrator.

Vodafone's arbitrator is Canadian lawyer Yves Fortier. Recently, the government has appointed New York-based law firm Curtis, Mallet-Prevost, Colt & Mosle as its counsel in the arbitration case.

Vodafone International Holdings BV in April had served arbitration notice under the Bilateral Investment Protection and Promotion Agreement (BIPA) between India and the Netherlands for resolving the dispute.

The case pertains to a capital gains tax dispute related to the acquisition of Hutchison Whampoa's stake in Hutchison Essar by Vodafone in 2007. Although Vodafone won the tax case in India's Supreme Court, the government amended the tax laws with retrospective effect to recover the amount.

The basic tax demand is Rs7,990 crore; but with interest and penalty, the amount claimed by the Indian government is around Rs20,000 crore.