Vodafone moves HC against I-T notice

Telecom giant Vodafone on Monday moved the Bombay High Court, challenging the Income Tax department's jurisdiction on a deal inked by the company in 2007.

Vodafone, which acquired the Indian assets of Hong Kong- based Hutchison in 2007, was served a tax notice by the I-T department over its failure to pay Rs 12,000 crore (Rs 120 billion) as tax on the $11.2-billion transaction.

"Vodafone does not believe that the Tax Authority has jurisdiction to seek to tax the transaction with Hutchison... Consequently, Vodafone International Holdings BV (VIHBV) has filed an appeal today with the Bombay High Court against the order on jurisdiction issued by the Tax Authority on May 31, 2010," Vodafone Group said in a statement.

The Income Tax Authorities had issued a show cause notice to Vodafone for non-payment of Rs 12,000-crore (Rs 120 billion) tax.

"Vodafone remains fully confident that no tax is payable and the legal advice we have received unanimously agrees," the statement added.

The dispute concerns Vodafone Group Plc's acquisition of 67 per cent stake in Hutchison Essar from Hong Kong's Hutchison Telecommunications International Ltd. The I-T Department is of the opinion that the transaction is taxable in the country.

Vodafone had earlier approached the Supreme Court, which refused to intervene in the tax dispute between the telecom firm and the I-T Department. It had asked the I-T Department to check whether it had the jurisdiction to proceed further in the tax case.

The government had approved the deal in May 2007 itself. After regulatory clearances were granted, the tax department issued a show-cause notice to Vodafone -- stating that the company did not deduct tax.

In 2007, Vodafone received a show-cause notice asking why it had not deducted tax over the transaction. Following this, the company approached the Bombay High Court.

After the high court dismissed Vodafone's petition challenging the I-T department's notice, the company moved the Supreme Court in January 2009. The Supreme Court granted Vodafone the right to appeal to the Bombay High Court if it disagreed with the tax authorities.