Vodafone moves apex court on tax issue

Telecom giant Vodafone has moved the Supreme Court challenging the Bombay High Court judgement that upheld the I-T department’s showcause notice asking it to pay tax of about $2 billion over its acquisition of Hutchison.

The Bombay HC on December 3 last year dismissed a petition by Vodafone International Holdings BV challenging a showcause notice by the I-T department.

The company had bought a 67 per cent stake in Hutchison Essar from Hutchison Telecom International (HTIL) in February 2007 by paying $11.2 billion. The I-T department had asked the telecom major to pay $1.7 billion as capital gains tax for its acquisition of stake in Hutchison Essar (now Vodafone Essar) in its showcause notice on September 19, 2007.

However, the court had given it eight weeks to file an appeal in the Supreme Court and had continued its earlier stay asking the department not to proceed against Vodafone.

Vodafone had moved the Bombay HC alleging that the tax department had no jurisdiction over a deal between two parties incorporated overseas.

The HC had said that Vodafone’s petition totally lacked “particulars as to the nature of agreement dated on February 11, 2007, and all other agreements preceding or following the same, entered into by HTIL and the petitioner (Vodafone International)”.