Supreme Court to hear Vodafone's plea on Hutch deal

A three judge bench comprising Chief Justice S H Kapadia and Justices K S Radhakrishnan and Swatanter Kumar will hear Vodafone’s plea.

Vodafone International moved the SC last week against the High Court order, which dismissed its petition challenging the Indian authority’s demand for Rs 12,000 crore in taxes on the Hutchison deal. The High Court division bench held that authorities in India have the jurisdiction to tax the transaction. “The transaction has sufficient nexus with India and the IT has the jurisdiction to levy tax on the transaction,” said the High Court verdict.

Hutchison’s telecom business in India comprised substantial chuck of its overall business, and the deal enabled Vodafone to enter the Indian market in a big way. The High Court, however, gave liberty to Vodafone to argue before the tax department that no penalty should be imposed as they genuinely believed they had no liability to deduct tax at source while making payment to Hutchison.

The department held Vodafone liable for not deducting tax at source on capital gains to Hutchison and claimed around Rs 12,000 crore in tax and penalty for the 2007 deal.