The Supreme Court would hear tomorrow a plea by Vodafone challenging the I-T Department initiating penalty proceedings in the $ 2 billion tax case relating to the company’s stake purchase in Hutchison-Essar. Voadfone’s application would be mentioned before a three judge bench headed by the Chief Justice S H Kapadia. Earlier, the I-T department had issued notice to Vodafone in March saying penal action would be initiated against the British telecom major in the tax case.

Vodafone in 2007 had purchased 67 per cent stake of Hutchison in Hutchison–Essar in for over $ 11 billion. The Income Tax (I-T) Department had raised a demand of about $ 2 billion on Vodafone as it failed to deduct (withhold) tax at the time of stake purchase.

The I-T department had on its March 23 sought to penalise Vodafone International, the holding company of Vodafone Essar, for failure to present Cayman Island income tax returns and certain other documents.

The I-T department had asked for these documents between January and October 2009.

Earlier, the apex court had directed Vodafone to submit Rs 2,500 crore and along with a bank guarantee worth Rs 8,500 in the Rs 11,000 crore tax demand by the IT officials.

The tax case has been pending in the Supreme Court and will come up for hearing on July 19.

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