New Delhi: Global telecom company Vodafone International Holdings BV, a subsidiary of UK-based Vodafone Group Plc, has been given until 12 March to submit extra information in its ongoing tax dispute with the Indian government, a senior income-tax official said.
Vodafone’s spokesperson said the firm is in the process of responding to the tax department’s second attempt to examine if its acquisition of erstwhile Hutchison Essar Ltd falls within the tax jurisdiction of Indian authorities.
The tax official, who did not want to be named, said his department would decide if it could raise a demand on Vodafone once the deadline ends. The Vodafone case, the official added, would set a precedent in all cross-border mergers involving an Indian company.
Vodafone on 29 January said in a statement the firm believes the deal fell outside the purview of Indian authorities.
The dispute arose after Vodafone paid $11.2 billion (Rs51,500 crore) for a 67% stake in Hutchison Essar (since renamed Vodafone Essar Ltd) in 2007. The government approved the deal in May the same year. Hong Kong-based Hutchison Whampoa Ltd, the seller, controlled its Indian subsidiary through a web of companies and finally, a Cayman Islands-registered firm received the payment from Vodafone.
According to the tax department, the Cayman Islands transaction was essentially a transfer of an Indian asset and Vodafone should have deducted tax at source when it paid Hutchison.
In 2007, Vodafone received a show-cause notice asking why it had not done this. Following this, the company approached the courts.