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SC dismisses Vodafone petition against I-T notice

SC dismisses Vodafone petition against I-T notice

The apex court asked why $2 billion should not be recovered from Vodafone.

New Delhi: The Supreme Court has dismissed Vodafone’s petition against the Income Tax department. In a significant ruling the apex court asked why $2 billion should not be recovered from Vodafone.

Vodafone was slapped with a tax bill of $2 billion by way of capital gains tax when it bought Hutch Telecom from the Ruhias.

Vodafone, the world's largest mobile phone company by sales, has said Indian law did not require it to deduct tax, and said capital gains tax was usually paid by the seller.

Vodafone appealed to the Supreme Court after the Bombay High Court last month dismissed its petition against the tax bill.

"Given the fact that the petition filed by Vodafone involves important questions of jurisdiction, (the Supreme Court) has asked the Tax Authorities to decide, as a preliminary issue only, whether it has jurisdiction to proceed against Vodafone," the statement released by Vodafone's public relations agency said.

The I-T department has said the deal is liable for tax because most of the assets are based in India and because under Indian tax law, buyers have to withhold capital gains tax liabilities and pay them to the Government.

The Supreme Court gave Vodafone special leave to take the case directly to the High Court if the tax authority decided against it, the company said.
first published:January 23, 2009, 22:09 IST