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Invoking a provision in the Supreme Court Rules that has been used rarely, the Registry had asked for 1% of the Rs 2,500 crores deposited by Vodafone as fees when the government wanted to withdraw it under an interim order passed by the apex court.

It amounted to Rs 25 crore. Neither did the government want to lose this nor did Vodafone want to deposit Rs 25 crore more to enable the Centre to withdraw the money, which it had deposited as a precursor to the apex court hearing its appeal against a Bombay High Court order validating the nearly $2 billion capital gains tax on the $11-billion acquisition of Hutch.

Clarifying that 1% of the money was going to the Delhi government, a bench comprising chief justice S H Kapadia and justices K S Radhakrishnan and Swatanter Kumar wanted to know from attorney general G E Vahanvati as to whether the government was ready to withdraw only Rs 2,475 crore, leaving out Rs 25 crore as court fees.

Vahanvati said if the government was allowed to withdraw Rs 2,475 crore, then in the event it loses the case, it would be giving back the principal amount, that is Rs 2,475 crore, with interest . On the other hand, Vodafone could deposit Rs 25 crore more, as it had volunteered to deposit the money, and enable the government to withdraw Rs 2,500 crore. In short, the government did not want to lose out on Rs 25 crore, court fees or otherwise.

The 1% being levied as handling charges under the seldom invoked provision ‘Entry 26 of Part III of Third Schedule of the Supreme Court Rules, 1966’ would be going to the consolidated fund of the central government. The AG said the Centre was coming up with a legislation to use the money accruing to the consolidated fund from court fee and other charges solely for improving the judicial infrastructure.

But, the matter found no resolution even in the second hearing. Senior advocate Harish Salve did not utter a word as his clients were not too keen to pitch in with an additional Rs 25 crore to help the Centre withdraw the money.

Finally, the bench asked the AG to consult the government and come back to the court with a solution, hinting that if the government did not withdraw the money, then the court could waive the 1% levy. The AG sought a week to do so.

On November 15 last year, the SC had agreed to hear Vodafone’s appeal but caveated its decision with a direction to the telecom giant to deposit Rs 2,500 crore within three weeks. It had also asked Vodafone to secure the rest of the demand, that is Rs 8,500 crore, by providing bank guarantee of a nationalized bank within eight weeks

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Category : Income Tax (25321)
Type : News (12688)
Tags : Vodafone tax case (13)

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