Retrospective Taxation Policy in India: A brief on

Vodafone-Hutchison Case

Taxation over the years has always been very controversial aspect of the Indian economy.
India has seen different versions of taxes dated back to the early days of Aryan rulers. The
first structural taxation was introduced by the British in India.

Now, we are seeing a different version of taxes which are being levied on big corporations,
which has left India red faced on the international stage with two major defeats in the
permanent court of arbitration. This article will examine the case in brief and ponder upon the
question, if India is truly serious about privatization, then why is retrospective taxation being
imposed onto the companies?

India had changed its taxation policy retrospectively in 2012, it had changed the effects
from1962 and used a back date demanded that taxes should be paid by companies from the
given back date. In the permanent court of arbitration, the companies appealed against this
order and India had lost this case.

Now, it is back in headline because India has appealed in the Singapore court of arbitration.
Domestically, the SC held that that the law itself goes back to 1962 hence, “Government is
not justified in claiming this tax from Vodafone”.1

1
Vodafone Cellular Limited and Ors. vs Union Of India, (2015) 12 SCC 1