NEW DELHI -- In a significant development, the government today decided not to appeal against a Bombay High Court ruling that Vodafone was not liable to pay tax demand of Rs 3,200 crore in a transfer pricing case.
"The government will not appeal the judgement of Bombay High Court in the Vodafone case," telecom minister Ravi Shankar Prasad said in a press conference after a meeting of the Union Cabinet.
The decision of not filing an appeal was taken at the highest level following advice by Attorney General Mukul Rohatgi, who advised the income tax department to accept the judgement of the Bombay High Court in the case.
"This is a very positive development. The misadventure of the tax department has come to an end," said Vodafone counsel Harish Salve in a TV interview.
The High Court in its October 10, 2014 order had given relief to the UK-based mobile service provider by ruling that it is not liable to pay the tax demanded by the government.
This tax demand, along with the decision to tax Vodafone retrospectively, were among the main reasons foreign investors became wary of coming to India despite it being a high-potential market. Both decisions were taken by the previous UPA government.
(With inputs from agencies)