Vodafone moves HC against I-T order on Hutch deal

British telecom major Vodafone today said it had filed an appeal against the Indian tax authorities for claiming legal jurisdiction on the company, making it liable to pay tax on its 2007 deal with Hutch on the latter’s Indian operations. The case is likely to be heard at the High Court here tomorrow.

In 2007, Vodafone paid $11.2 billion to acquire Hutch’s 67 per cent stake in Hutchison Essar. The income tax department sent a showcause notice to the company, asking it to pay capital gains tax on this transaction.

Last week, the company got another showcause notice from the I-T department, quantifying the liability at Rs 12,000 crore. This is significantly higher than what was claimed earlier, and possibly includes interest and penalty as well.

The matter had earlier gone to the HC here and then to the Supreme Court, after an I-T notice last October. Vodafone petitioned the HC and then the SC, challenging the tax department’s jurisdiction in the case. The SC had passed an order quashing that particular plea and asked the Central Board of Direct Taxes to look into the issue; it said Vodafone could appeal again, if aggrieved.

“This step is in line with the Supreme Court judgment in January 2009, granting Vodafone International Holdings BV a specific right of appeal to the Bombay High Court if it disagreed with the tax authority’s view. Vodafone remains fully confident that no tax is payable and the legal advice we have received unanimously agrees,” the company said in a statement.

Vodafone believes tax is not payable as the deal was not done in India. The tax authorities say the assets in question were in India and so capital gains tax applies.