More trouble for Indian telecom operators: Center files petition on Vodafone tax demand

By Telecom Lead Team: The Center has filed a petition
before the Supreme Court seeking a review of the apex court verdict on the
multi-billion tax demand on mobile major Vodafone.


SC rules in favor of Vodafone in $2.2 billion tax case


Recently, Vodafone won the $2.2 billion tax case against
the income tax department.


Supreme Court Chief Justice S.H. Kapadia recently ruled
that the tax department has no jurisdiction over Vodafone’s purchase of mobile
assets in India.


Vodafone, fighting the tax bill over its $11 billion deal
to buy Hutchison Whampoa’s Indian mobile business in 2007, had appealed to the
Supreme Court after losing the case in the Bombay High Court in 2010.


Vodafone believes Indian tax office has no right to tax
the transaction between two foreign entities, and even if any tax is to be
paid, it should be paid by the seller not the buyer.


Indian authorities have said the deal was liable for tax
because most of the assets were based in India and because under local tax law,
buyers have to withhold capital gains tax liabilities and pay them to the


According to the Supreme Court Web site, the case will be
heard on February 27, Hindu BusinessLine reported.


The Income-Tax Department — which had raised a demand of
$2.6 billion (Rs 11,297 crore) on the 2007 Vodafone-Hutch deal — is now
claiming that the apex court did not correctly interpret the I-T Act in the
case, according to legal sources.


Reacting to the development, Vodafone said in a statement
that the Supreme Court had clearly and unambiguously ruled that there was no
tax to pay on the Vodafone-Hutchison transaction.”

Vodafone notes the filing of the tax authority’s review
petition, which will be evaluated by the same Bench that ruled on the
Vodafone-Hutchison case, and has no further comment to make at this stage,” the
company statement said.

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