The UK-based Vodafone Group Plc is confident that it would not have to shell out income tax in India for the Group’s $11.2-billion acquisition of local mobile operator Hutchison Essar Ltd in 2007. The Netherlands- based unit of Vodafone — Vodafone International Holdings BV had acquired a 67 per cent stake in Hutchison Essar, which has since been renamed as Vodafone Essar.
Indian income tax authorities had slapped a notice on VIH (through Vodafone Essar) for non-deduction of tax at source as the deal involved transfer of an Indian asset. The Bombay High Court is expected to hear on August 2 arguments over question of jurisdiction.
“We have confidence in the court process. India has a very solid legal system and we will just go on and on until our reasons are heard,” Mr Vittorio Colao, Chief Executive of Vodafone Group Plc, told reporters on Thursday.
The tax bill for Vodafone Group for the Hutchison Essar deal could be about $2.5 billion. The ruling on the Vodafone matter will have far-reaching implications on other transactions done abroad but involving underlying Indian assets.
Meanwhile, in a recent development, Vodafone has decided to settle its long pending tax dispute with UK authorities over its foreign earnings and agreed to shell out £1.25 billion over five years.
When the matter is being heard by the hon’ble High Court, the matter is called SubJudice(meaning: Under judicial deliberation or before a judge or court of law.). This tantamount to unfair influencing of the Court, which is incorrect in the eyes of the Law & should not be perpetuated with. Ideally, its not a good Corporate Governance on the part of such a Reputed Corporate.
How is this foreign company confident that India’s income tax department is a bunch of fools not worth their salt? True, to the government of India and the IAS, those in the Revenue service are less than human beings not deserving the status their counterparts enjoy in the truly “advanced” countries and are deliberately and consciously kept subservient to the IAS (of course, with the full support of the political class of all parties), and undoubtedly the reported confidence definitely emanates from the moral support from those quarters. But, even then, does it look decent and proper for a party to a legal proceeding to publicly declare that it would win its case against the income tax department (or, to be fair, the State)-tantamounting to foreclosing the matters which are sub judicial?
Is it permitted in the country of origin of this entity?