This works:
gvim -c "set et|retab|wq" foo.txt
set et (= set expandtab) ensures the tab characters get replaced with the correct number of spaces (otherwise, retab won’t work).
I don’t normally use it, but vim -c ... also works
The solution as given above presumes the default tab stop of eight is appropriate. If, say, a tab stop of four is intended, use the command sequence "set ts=4|set et|retab|wq".