The Supreme Court today waived one per cent court fee on the Income Tax Department , on the Rs 2,500 crore deposited by the Vodafone International Holdings , after the government gave an undertaking that it would not make claim of “unjust enrichments”.
A bench headed by the Chief Justice S H Kapadia waived Rs 25 crore or 1 per cent of Rs 2,500 crore deposited by Vodafone as court fee, from the Income Tax department.
The apex court’s order came after the Attorney General Goolam E Vahanvati, appearing for the government, gave an undertaking with regard to “unjust enrichments”.
Vahanvati said on record that “the Department (I-T) will not invoke the doctrine of unjust enrichment in the event of their losing the matter.”
Following it, the bench, which also consisted of Justices K S Radhakrishnan and Swatanter Kumat ordered, “In the circumstances, charging of one per cent Commission is dispensed with. The Revenue will coordinate with the Registry in the matter of transfer of funds to the Income Tax Department.”
Invoking the doctrine of unjust enrichment would have meant that the tax department, claiming a loss of Rs 25 crore, could argue to refund only Rs 2475 crore.
In December, the government had moved an application requesting the Supreme Court to waive the fee for letting it withdraw Rs 2,500 crore, deposited by Vodafone.
Instead, it had requested the court to direct Vodafone to submit Rs 25 crore extra, so that the government gets the full amount of Rs 2,500 crore.
Vodafone had deposited the sum as court fee for the adjudication of its appeal against the government’s demand of over Rs 11,000 crore in taxes for its deal to buy Hong Kong based Hutchison Telecom, which had substantial cellular assets in India through a JV with the Essar group.
In 2007, Vodafone, through its group firm Vodafone International Holdings, bought Hutchison Telecommunications India’s 67 per cent stake in Hutchison Essar for about USD 11 billion (Rs 55,000 crore).
The tax authorities claim that the deal attracts a tax of over Rs 11,000 crore, even though the deal was done by two MNCs outside the country.
On November 15, the Supreme Court had directed Vodafone, which is contesting the tax demand to deposit Rs 2,500 crore, along with a bank guarantee of Rs 8,500 crore, before it within 8 weeks for adjudication of its suit.
It had also stipulated that the government can withdraw Rs 2,500 crore on an undertaking by the Directorate General of International Tax (DGIT) that if the verdict goes in favour of Vodafone then it will refund Rs 2,500 crore with interest.
As the government approached the court to withdraw the funds deposited by Vodafone,it was asked to deposit 1 per cent of Rs 2,500 crore as commission under a set of rules.