"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'," Vodafone said in a statement.
Vodafone is contesting a $2.5 billion tax bill in India over its acquisition of a controlling stake in a mobile firm. It had earlier appealed to the Supreme Court challenging a lower court order that Indian tax office had jurisdiction over tax bills in cross-border deals. The Supreme Court is scheduled to hear the case on July 19.
"All the advice received by Vodafone during and since the acquisition is that there is no tax or therefore penalty that arises," Vodafone said in Tuesday's statement, adding it would take all steps needed to defend itself.