Thaindian News

New Delhi, Oct 22 (IANS) Indian tax authorities Friday asked global mobile firm Vodafone to pay over Rs.112 billion (around $2.53 billion) as tax in the 2007 purchase of Hutchinson Whampoa’s mobile business.

The tax department’s claim of its right to tax Vodafone was upheld by the Supreme Court, which asked the authorities to determine the extent of Vodafone’s liabilities within four weeks.

“The Income Tax Department today (Friday) issued an order raising a tax demand of Rs.11,217.95 crore on Vodafone International Holdings BV for failure to deduct tax as required under section 195 of the Act before making a payment of $11.07 billion to Hutchinson Telecommunications International limited,” said a statement from the finance ministry.

The company has to pay the tax within 30 days of the receipt of the notice.

Vodafone bought 67 percent stake sold by Huctchinson Whampoa - the foreign partner of the mobile company - for $11.07 billion and has been embroiled in a dispute with tax authorities who are claiming $2.53 billion from the Britain-based global mobile major.

Vodafone has been contending all this while that as the deal involved transfer of shares of a foreign company between two non-residents, the tax authorities had no jurisdiction over the deal.

However, this argument of the company was not accepted by the Bombay High Court, which ruled in favour of the Income Tax department, following which Vodafone filed an appeal in the Supreme Court.

However, the apex court Sep 27 did not grant any relief to Vodafone and asked the Income Tax Assessing Officer to determine and quantify the tax liability of Vodafone within four weeks.