The government on Friday sought a review of the Supreme Court’s verdict that British telecom giant Vodafone was not liable to pay Rs 11,218 crore in taxes to acquire a majority in mobile phone operator Hutchison Essar in 2007.
In a judgement with significant implications for foreign investments, the Supreme Court had on January 20 held that companies could not be taxed in India for acquiring assets if the deal was concluded overseas.
However, terming it a “blatant error”, the Centre in its review petition said 15 aspects of the case placed by I-T department was not dealt by the SC.
The review petition faulted the verdict for having relied on the proposed Direct Taxes Code, saying it was totally wrong, as there was no judicial precedent of relying on pending legislation to interpret an existing one.
The Centre said the SC failed to appreciate that transfer of rights of management was a capital asset and the term capital asset included all property.
It also disputed the figure of over Rs 20,00 crore mentioned in the verdict as having been paid to the government by Vodafone as direct and indirect taxes, saying there was no basis for this figure and it was wholly irrelevant .
They court has failed to analyse the clauses of the sale-purchase agreement, which demonstrated the true nature of the transaction that involved transfer of property rights as well. Sale Purchase Agreement between the two recorded the true intention of parties, it added.
In a statement, Vodafone said the SC had clearly and unambiguously ruled that there was no tax to pay on the Vodafone-Hutchison transaction.