SC plea in MFN case to use Vienna Convention

Court had said govt needs to notify MFN tax rate for its applicability

- Pavan Burugula

European multinational companies facing hefty tax demands in India have filed a review petition urging the Supreme Court to follow the Vienna Convention in interpreting the most-favoured nation (MFN) clause in tax treaties, two people familiar with the matter said.

Ruling on a batch of five petitions, a landmark 19 October Supreme Court verdict had backed the tax department in the matter, effectively doubling the withholding tax outgo of these companies, and potentially opening up more companies to similar tax demands.

The aggrieved companies soon filed review petitions; among them, Steria India challenged a tax ruling pertaining to the India-France tax treaty. Concentrix Services BV and Optum Global Solutions challenged a tax ruling interpreting the India-Netherlands treaty; and Nestlé’s appeal was about India-Switzerland tax treaty. While each of the cases vastly differed from each other, the common question of law involved the MFN clause.