The Indian government may have to pay a total of Rs 85 crore, if it decides not to appeal against Friday’s ruling of the Permanent Court of Arbitration (PCA) in the Rs 22,100 crore retrospective tax dispute with Vodafone Group. The arbitration tribunal on Friday delivered its verdict in favour of Vodafone against Indian government’s retrospective tax demand of capital gains tax.

As per an IANS report on Saturday, Finance Ministry sources said that the court has asked the Indian government to pay only 4.3 million pounds, or about Rs 40 crore, which is 60 per cent of the tribunal’s administrative cost while the rest 40 per cent would be borne by Vodafone. Also, the government may have to refund the tax collected, which is about Rs 45 crore, only if it does not go for appeal against the award.

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Therefore, the total outgo would be around Rs 85 crore only.

The Finance Ministry, in a statement, said that the government will make a decision on the further course of action, including legal remedies, among other options including legal remedies before appropriate fora.

The statement issued by the ministry read as: “The Finance Ministry has just been informed that the award in the arbitration case invoked by Vodafone International Holding BV against Government of India has been passed. The Government will be studying the award and all its aspects carefully in consultation with our counsel”.

Vodafone had moved the International Court of Justice (ICJ) in 2016 due to a lack of consensus between the parties’ arbitrators in finalising a judge for a tax dispute. Following this, a tribunal was constituted in June 2016 after Vodafone challenged India’s use of a 2012 legislation that gave it powers to retrospectively tax deals like Vodafone’s $11 billion acquisition of 67 per cent stake in Hutchison Whampoa in 2007.

The retrospective tax law had been enacted after a Supreme Court judgement went in Vodafone’s favour.

Vodafone had challenged the tax department’s demand of Rs 7,990 crore as capital gains tax (Rs 22,100 crore after including interest and penalty) under the Netherlands-India Bilateral Investment Treaty (BIT). In 2007, the Income Tax Department had slapped a demand notice seeking capital gains tax.