Vodafone International Holdings BV, a unit of Vodafone Group plc, on Monday filed an appeal in the Bombay High Court against the decision of the Indian tax authorities asking it to pay tax on its acquiring a majority stake in local mobile-telephone operator Hutchison Essar for $11.1 billion in February 2007.
In a statement, Vodafone Group plc said that the appeal filed by its unit Vodafone International Holdings BV was against the tax authorities' order of May 31, 2010, which said that it had the jurisdiction to tax the transaction and the tax liability of Vodafone is estimated to be around Rs. 12,000 crore. The Vodafone statement said that while an amount of tax has been suggested by the tax authorities, “it is important to note that this is not a demand for payment.”
Vodafone's contention has been that it is not liable to be taxed in India because its deal to buy a 67 per cent stake in Hutchison Essar from Cayman Islands-registered CPG took place on foreign soil. The tax department's case has been that Hutchison made capital gains in the deal, and while paying the amount to Hutchison, Vodafone should have deducted tax on it.