SC to waive Rs 25 cr fee on Vodafone's deposit

The Supreme Court today said it would waive the 1 per cent court fee on the Income Tax Department, on the Rs 2,500 crore deposited by the Vodafone International Holdings, if the government gives an undertaking that it would not make claim of "unjust enrichments".

A Bench comprising Chief Justice S H Kapadia and Justices K S Radhakrishnan and Swatanter Kumar expressed willingness to waive off the fee, if the government gives an undertaking before it that it would not make "unjust enrichments" if they lose their case against Vodafone.

"If you make statement that we will not make unjust enrichments claims if you lose (then we would)," the Bench said to the Attorney General Goolam E Vahanvati, representing the government.

The "doctrine of unjust enrichment" has been propounded as an equitable concept created to remedy injustices that occur where one person makes a substantial contribution to the property of another person without compensation.

Vahanvati said the stake in this matter was big and he would make statement on Monday, after consulting the government.

He further submitted that 1 per cent court fee must be waived off, otherwise in the event of losing the case, the government will pay back Rs 2,475 crore only to Vodafone.

In December, the government had moved an application requesting the Supreme Court to waive the fee for letting it withdraw Rs 2,500 crore, deposited by Vodafone.

Instead, it had requested the court to direct Vodafone to submit Rs 25 crore extra, so that the government gets the full amount of Rs 2,500 crore.

Vodafone had deposited the sum as court fee for the adjudication of its appeal against the government's demand of over Rs 11,000 crore in taxes for its deal to buy Hong Kong based Hutchison Telecom, which had substantial cellular assets in India through a JV with the Essar group.

In 2007, Vodafone, through its group firm Vodafone International Holdings, bought Hutchison Telecommunications India's 67 per cent stake in Hutchison Essar for about $11 billion (Rs 55,000 crore).

The tax authorities claim that the deal attracts a tax of over Rs 11,000 crore, even though the deal was done by two MNCs outside the country.

On November 15, the Supreme Court had directed Vodafone, which is contesting the tax demand to deposit Rs 2,500 crore, along with a bank guarantee of Rs 8,500 crore, before it within 8 weeks for adjudication of its suit.

The apex court had also stipulated that the government can withdraw Rs 2,500 crore on an undertaking by the Directorate General of International Tax (DGIT) that if the verdict goes in favour of Vodafone, then it will refund Rs 2,500 crore along with the interest.

As the government approached the apex court to withdraw the funds deposited by Vodafone, it was asked to deposit 1 per cent of Rs 2,500 crore, totalling Rs 25 crore, as commission under a set of rules.