New Delhi: After a month of exploring all legal options, the Union government is set to challenge an international arbitration decision that favoured Vodafone Group on a retrospective tax demand of Rs 20,000 crore, a report said on Tuesday.Also Read - After Vodafone-Idea, Government To Get 9.5 Per Cent Stake In Tata Teleservices

According to an NDTV report, the government has chosen to take Solicitor General Tushar Mehta’s advice and challenge the decision on grounds that an arbitration tribunal cannot overrule the law passed by a sovereign Parliament. Also Read - Govt To Rollout 5G by 2022, Constitutes Panel to Capitalise 6G Opportunities

Earlier on October 8, Finance Minister Nirmala Sitharaman had taken her first review meeting on the Vodafone tax case and sought the Attorney General’s opinion on the possible legal options of appealing in the matter. Also Read - Did You Know World's First SMS Was 'Merry Christmas'? It Will Now be Auctioned as NFT

The government was taken aback when the Permanent Court of Arbitration in Hague ruled that the conduct of India’s tax department is in breach of “fair and equitable” treatment as per the Netherlands-India Bilateral Investment Treaty (BIT).

The case dates back to 2016 when Vodafone had moved the International Court of Justice (ICJ) due to a lack of consensus between the parties’ arbitrators in finalising a judge for the 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 a 67 per cent stake in Hutchison Whampoa in 2007. The retrospective tax law had been enacted after the Supreme Court judgement went in Vodafone’s favour.

Buoyed by the arbitration award in September, Vodafone Idea stock had closed 12 per cent higher at Rs 10.20.