The Supreme Court on Friday ruled in favour of British telecom major Vodafone in the biggest tax dispute case in Indian corporate history. The company had challenged the Bombay High Court order asking it to pay around Rs.11,000 crore (2.4 bn dollars) to the income tax (I-T) department for an acquisition in the country.
The apex court said Indian tax authorities have no jurisdiction on overseas transactions.
In 2007, when Vodafone took over Hutchison International, the I-T department had slapped a tax notice for non-payment of dues saying the company had acquired assets in the country as Vodafone deal involved entities based in Britain, the Netherlands, Cayman Islands, Mauritis and Hong Kong.
In this case, Hong Kong-based Hutchison International sold its shares in the Indian company through a company based in an offshore destination.
Vodafone hails SC verdict
UK-based Vodafone Group Plc, the parent company of Vodafone Essar, on Friday hailed the Supreme Court’s ruling to set aside the Bombay high court judgement asking the company to pay income tax of Rs 11,000 crore.
Vodafone which is the second largest telecom operator in India, said the judgement underpins its confidence in the country.
“We welcome the Supreme Court’s decision, which underpins our confidence in India. We will continue to grow our Indian business – including making significant investments in rural areas and in 3G network coverage – for the benefit of Indian consumers,” Vodafone CEO Vittorio Colao said in a statement.
The company said, “Vodafone has maintained consistently throughout the legal proceedings that this transaction was not taxable and we are pleased with today’s judgement in the Supreme Court.”
The court also asked the IT department to return Rs 2,500 crore deposited by Vodafone, in compliance of its interim order, within two months along with 4 per cent interest.
It asked Supreme Court registry to return within four weeks, the bank guarantee of Rs 8,500 crore given by the telecom major.
“We are a committed long-term investor in India and we have made clear all along that we have faith in the Indian judicial system,” Colao added.