RC Lahoti appointed arbitrator in Vodafone tax dispute

The government today announced the appointment of former Chief Justice of India R C Lahoti as arbitrator in the Rs20,000-crore tax dispute with UK telecom major Vodafone Plc.

Lahoti will be the Indian government's representative in the three-member arbitaration panel.

The UK company had initiated arbitration proceedings against the Indian government in a London court and the government's move is in response to an arbitration notice served by Vodafone International Holdings BV in April under the Bilateral Investment Protection and Promotion Agreement between India and the Netherlands.

Following the arbitration notice served by Vodafone International Holdings B.V. in April, the previous UPA government had, on 15 May announced the withdrawal of a coneliation offer to Vodafone on the tax dispute.

The cabinet had, in June last year, extended a conceliation offer to Vodafone in a bid to resolve the capital gains tax claims over its 2007 acquisition of Hutchison Whampoa's stake in Hutchison Essar.

While the basic tax demand was Rs7,990 crore, the total outstanding, including interest and penalty, is estimated to have shot up to Rs20,000 crore.

The Supreme Court had ruled in Vodafone's favour in 2012, saying the company was not liable to pay any tax over the acquisition of assets in India from Hong Kong-based Hutchison.

The government, however, amended the tax laws with retrospective effect to undo the Supreme Court judgement and claim taxes.