Bombay HC adjourns hearing on Vodafone appeal till July 8

The Bombay High Court today adjourned to July 8, the hearing on an appeal filed by Vodafone International in a dispute over tax liability.

The court also stayed the ruling passed by the I-T department on May 31.

The dispute is over the tax liability of Vodafone after it acquired Hutchison International's stake in Hutchison- Essar in a $11.1-billion deal in 2007.

On May 31, the Income Tax held in a ruling that it had the jurisdiction to tax the transaction. The tax liability of Vodafone is estimated to be around $2 billion.

The tax department's case is that Hutchison made capital gains in the deal, and while paying the purchase amount to Hutchison, Vodafone should have deducted tax on it.

The department had issued a show-cause notice to Vodafone in 2007, which was challenged before the Bombay High Court. After the Court dismissed Vodafone's petition, it went to the apex court in January 2009.

The Supreme Court sent the case back to the I-T department, to first decide whether the department had the jurisdiction, because both Vodafone and Hutchison are based in foreign countries.

The I-T department, last month, held that it had the jurisdiction and the case will now begin afresh in the High Court.