British telecom major Vodafone today contested Rs 11,000 crore tax imposed by Indian authorities on its acquisition of Hutchison, saying it has no tax liability and will continue to take actions to defend itself.
“Vodafone International Holdings BV believes that it has no liability for Indian withholding taxes on the Hutchison transaction in 2007 and continues to take actions to defend itself vigorously in the period,” the UK-based firm said in a statement.
Vodafone in 2007 through its group firm Vodafone International Holdings had bought Hutchison India’s 67 per cent stake in Hutchison-Essar joint venture for about $ 11 billion (Rs 55,000 crore).
The tax authorities has claimed that the deal attracts a tax of over Rs 11,000 crore, even though the deal was done by two MNCs outside the country.
Earlier in November, Vodafone International was asked to make a deposit with the Supreme Court of Rs 25,000 crore and provide a guarantee for Rs 8,500 crore. The Supreme Court is scheduled to hear the appeal on the issue of jurisdiction on July 19, 2011.
In addition, separate proceedings being taken against Vodafone International seek to treat the firm as an agent of Hutchison in respect of its alleged tax on the same transaction.
The company said transaction is subject to appeal in the Bombay High Court where further actions of the Indian Tax authority are currently stayed and a hearing is scheduled for February 8, 2011.
“VIHBV considers that neither it nor any other member of the Group is liable for such withholding tax or is liable to be made an agent of Hutchison,” Vodafone said.
Apart from tax issue, Vodafone also has some other concerns in the country.
The UK-based firm has objected to Essar’s plans to merge the holding firm Essar Telecommunications Holding Pvt Ltd, having 11 per cent stake in Vodafone-Essar, with India Securities Ltd , a listed firm of Essar Group.
Vodafone has objected on the merger saying this could distort the valuation of the joint venture.
However, the company does not mention its ongoing spat with Essar in its 11-page report.
Vodafone-Essar is the third largest mobile operator in India. Vodafone had acquired nearly 67 per cent stake in 2007 from Hutchison while Ruias-led Essar have little over 33 per cent equity in the joint venture.