I-T dept notice: Vodafone moves SC for protection

The I-T department had issued a show-cause notice to Vodafone in June 2010,stating a liability of Rs 11,218 crore for its 11.2 billion deal whereby it acquired Hong-Kong-based Hutchison Telecom Internationals 67 per cent stake in Hutch-Essar,in 2007.

The Bombay High Court had earlier dismissed Vodafones challenge of the tax claim,following which,Vodafone filed an appeal in September with the SC. The hearing on this case is scheduled to come up on July 19.

In a statement Tuesday,Vodafone said that the notice shows the unpredictable nature of the tax policy and that it is difficult to understand the rationale behind the tax authorities seeking to impose penalties on a matter which the tax authorities have,themselves,described as a test case.

Seeking penalties on a test case involving a major infrastructure investor highlights the unpredictable nature of Indias taxation policy. This move is only likely to raise further concerns among potential investors into India, it said.

The statement said that established tax laws are being reinterpreted in a completely new way and there are no previous examples of such taxes being imposed in India on an overseas share transfer such as this.

Indian law precludes the tax authorities from imposing penalties in cases where the assessee has acted on reasonable legal advice in view of past tax precedent in India or the issue of imposition of tax is being decided for the first time by courts of law in India, it added.