Vodafone tax case
The Supreme Court yesterday adjourned the hearing in Vodafone’s appeal against the 8 September Bombay High Court order to 15 November, following a Rs 11,218 crore tax liability notice served by the income tax department on the telecom giant on Friday.
Vodafone has filed its appeal to the Supreme Court challenging last week’s Bombay High Court order that said the Indian tax authorities could charge Indian tax on its $11bn acquisition of Hutchison Essar in 2007.
Vodafone released a statement today saying that the company remained “convinced that there is no tax to pay on the Hutchison transaction” and would “continue to defend this position vigorously”, according to the Times of India.
The Bombay High Court had left open the option of an appeal, which was to be made within 12 weeks. The court also ruled that the tax authorities would not be able to make a final decision in the matter until eight weeks from the date of judgment last week (8 September).
Following yesterday’s Bombay High Court victory against Vodafone and Hutchison in their potentially $2bn tax bill appeal, the Income Tax Department’s acting chairman Sudhir Chandra told the Business Standard: “[Income Tax] Department's position stands vindicated. It is a clear cut case of deliberate non-compliance to law on misplaced legal advice. This [Vodafone case] is a test case, we will look at similar cases. There are already some cases under investigation.
Yesterday's Bombay High Court decision that the tax authorities are permitted to assess Vodafone for its Indian tax liability in its acquisition of Hutchison Whampoa in 2007, means that previous and future foreign investments into India would face legal uncertainty, according to tax and corporate lawyers.
The Bombay High Court has held that the Indian tax authorities were correct in assessing Vodafone for its Indian tax liability in the $11bn acquisition of Hutchison Essar.