Mumbai court finds Vodafone liable for tax

9 Sep 2010

UK-based Vodafone Group has lost its appeal against a USD2 billion tax bill in India, with the Mumbai High Court ruling that it must pay capital gains tax relating to its 2007 purchase of a controlling stake in Vodafone Essar, then Hutchison Essar, the Financial Times reports. According to TeleGeography’s GlobalComms Database, the UK outfit filed a petition against the tax charges after claims that it was liable for capital gains tax as most of the assets it bought were based in India. Vodafone challenged the charge, arguing that Indian law at the time did not require it to withhold tax on the acquisition, and that capital gains tax was usually paid by the seller, not the buyer. Vodafone Group is expected to take the matter to the country’s highest judicial body, the Supreme Court in New Delhi, with Des Webb, global tax executive at Vodafone, noting: ‘We need to consider our options. We have to look at the judgment in detail, we will be discussing it with our advisers … but we are seriously considering an appeal to the Supreme Court. We continue to believe strongly that this transaction is not taxable in India and will continue to defend our position.’

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