After having lost an appeal in the Bombay High Court regarding paying the Indian Government taxes worth approximately USD 2 billion, Vodafone India has decided to challenge the decision in the Supreme Court of India. These taxes relate toVodafone’s purchase of a controlling stake in the erstwhile ( former ) mobile operator Hutch (Hutchison Essar) for about USD 11 billion in 2007.
The Indian Income Tax Department had levied these taxes on Vodafone immediately following the Hutch deal and Vodafoneappealed against it in the court. The matter has been sub-judicial since then, from 2008 onwards.
Accordingly to Vodafone, since the deal took place overseas, the company has no tax liabilities in India. However, as per the High Court, since a part of the transaction had direct linkage to India, the company is liable to pay taxes.
While the estimated tax liability on Vodafone is about USD 2 billion, the High Court decision has not specified the exact amount of tax Vodafone needs to pay. However, Vodafone’s lawyer, Harish Salve confirmed that the company will be soon filing its appeal the Supreme Court against High Court’s decision.
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