The Supreme Court dismissed on Tuesday the tax department's plea seeking a review of the court's earlier ruling that Vodafone Group Plc was not liable to pay any tax on its acquisition of Indian mobile assets, a lawyer on the case said.
Vodafone won a five-year legal battle against the Indian tax authorities in January as the Supreme Court dismissed a $2.2 billion tax demand raised over the British mobile phone giant's acquisition of Indian mobile assets in 2007.
The tax office last month filed a petition seeking a review of that judgment.
The tax demand was over Vodafone's $11 billion deal to buy Hutchison Whampoa's Indian mobile business.
Vodafone, the world's largest mobile operator by revenue and the biggest overseas corporate investor in India, had argued that the Indian authorities had no right to tax the transaction between two foreign entities.
Even if tax was due, the company had argued, it should be paid by the seller and not the buyer.
The Indian authorities had said the deal was liable for tax as most of the assets were in India and as per the local tax law, buyers have to withhold capital gains tax liabilities and pay them to the government.
Vodafone's victory was seen as a move that would encourage foreign investment at a time when India's reputation has taken a hit amid slowing growth, concerns about government policies and a slew of corruption scandals.
The government proposed in its budget last week retrospective changes in tax rules, prompting speculations that the Vodafone tax case could be re-opened, although a senior government official said the government was not looking to raise any new tax demand on the mobile carrier.