A dispute relating to tax started when Vodafone acquired Indian mobile assets from Hutchison Whampoa in 2007 and involved Rs 12000 crore in interest and Rs 7900 crore in penalties. The government of India demanded that on this acquisition Vodafone has to pay a tax of Rs 11000 crore but the company refused to do so.
In 2012, the Supreme Court gave its decision in favour of Vodafone. But later in this year the government changed the rules of taxes. To this in 2014, Vodafone carried arbitration proceedings against India. The tribunal held that the government had breached the investment treaty agreement between India and Netherlands by imposing tax liability on Vodafone. It thus passed the awardstating that the government has to pay compensation to Vodafone company of more than Rs 40 crore. It also have to pay to Vodafone all the cost incurred by it for conducting arbitral proceedings and appointing arbitrator. The government was also asked to stop asking further dues from Vodafone.
The Indian government claimed that the award of the arbitration tribunal cannot go against the law passed by the parliament and thus the decision should be challenged. It said that it would decide whether to appeal or not till December as time limit of 90 days are available if one wishes to appeal against the decision of arbitral award.