The government has requested the Supreme Court to waive its 1 per cent commission for letting it withdraw Rs 2,500 crore, which has been deposited in the court by telecom firm Vodafone International Holdings. Instead, it has 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 Rs 11,000 crore in taxes, for its deal to buy Hong Kong based Hutchison Telecom that had substantial cellular assets in India through a JV with 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 if the deal was done by two MNCs outside the country.
The plea filed today by the Income Tax department is to be heard by a bench of Chief Justice S H Kapadia.
Additional Solicitor General Mohan Parasharan said that in its application, the IT department has pleaded to the court to exempt it from paying Rs 25 crore as commission for withdrawing the sum deposited by Vodafone.
He said the IT department has also requested the apex court to direct Vodafone to submit Rs 25 crore extra, so that the government gets Rs 2,500 crore.
On November 15, the Supreme Court had directed Vodafone, which is contesting the Rs 11,000 crore tax demand from the IT department 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.
The apex court 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 its verdict goes in favour of Vodafone, then it will refund Rs 2,500 crore along with the interest.
As the government approached the apex court to withdraw Vodafone’s fund deposited as court fee, it was asked to deposit 1 per cent of it, totalling Rs 25 crore as commission.
The apex court demanded the commission, making a rare invocation of Entry 26 of Part III of Third Schedule of the Supreme Court Rules, 1966, to demand 1 per cent commission on the deposited amount.
Seeking waiver on payment of this commission, the IT department application said that the rare invocation of the court’s rule to demand the commission on the deposited amount would mean that the government will be allowed to withdraw only Rs 2,475 crore.
It said that the apex court should ask Vodafone to pay extra 25 crore to meet the government’s liability to pay the commission.