SC tells Vodafone to respond to I-T

Vodafone suffered a major setback after the apex court declined to grant it relief in the tax claim case wherein Income Tax authorities have raised a demand of about $2 billion on its purchase of a 67% stake in Hutchinson Essar.

Telecom giant Vodafone suffered a major setback after the Supreme Court on Friday declined to grant it relief in the tax claim case wherein Income Tax authorities have raised a demand of about $2 billion on its purchase of a 67 per cent stake in Hutchinson Essar from Hutchinson Telcom International (HTIL) in February, 2007.

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A bench comprising Justices SB Sinha and MK Sharma refused to hear the plea challenging the order of the Bombay High Court, which had on December 3, 2008 dismissed Vodafone International Holdings’ petition challenging the IT Department’s notice.

Even before senior advocate Fali Nariman could open arguments for Vodafone, the bench showed its displeasure for not filing the sale agreement. “Where is the copy of the agreement? You have filed additional documents but not the agreement. You have not produced it even before the High Court,” said Justice Sinha. The bench asked the company to go back to the IT Department and respond to the showcause notice.

Netherlands-based Vodafone purchased a majority stake in Hutchison Essar for $11.2 billion. The IT Department had asked Vodafone to pay $1.7 billion as capital gains tax for the stake buy.

It said the issue of the IT Department’s jurisdiction to issue the notice would be decided by the tax authorities. “Let us have the opinion of the authority... And if you (Vodafone) are aggrieved by the department’s order then you can move the High Court,” the bench said.