Vodafone said on Friday it had filed a writ with the Bombay High Court defending itself against a new step by Indian tax authorities to treat the company as an agent of the seller in its 2007 purchase of Hutchison Whampoa Ltd’s mobile business in the country.
Vodafone is fighting a tax bill in India, which tax authorities say is more than 120 billion rupees ($2.7 billion) including interest, on the $11.1 billion deal.
Tax authorities have said Vodafone’s deal was liable for tax because most of the assets were based in India and buyers must withhold capital gains tax liabilities and pay them to the government. Vodafone has said Indian law did not require it to deduct tax and that the tax is usually paid by the seller.
In a statement on Friday, Vodafone said the tax office has now initiated a “different process”, treating Vodafone as an agent of the seller and termed it an “unusual development.”
Vodafone has appealed to the Supreme Court over the tax authorities’ jurisdiction to tax the deal, after the Bombay High Court dismissed its petition and ruled that the tax office had jurisdiction.
The Supreme Court will set a date on Oct 25 for hearing Vodafone’s appeal challenging the lower court ruling, the world’s largest telecommunications operator by revenue said last month.
“Vodafone contends that the key issue of jurisdiction (as to whether the Indian tax office can tax the transfer of a foreign company’s shares between two non-residents) is currently under appeal to the Supreme Court of India,” the company said in Friday’s statement.
“Hence any action which seeks to treat Vodafone as an ‘agent’ of Hutchison is misguided and premature,” it said.
The Supreme Court had asked the tax office to determine potential tax liability by Oct 25, Vodafone said last month.
The company reiterated on Friday that it believed it had no tax liability on the transaction.