SC directs Vodafone to deposit 2,500 cr, bank guarantee of 8,500 cr
New Delhi:The Supreme Court on Monday directed telecom company Vodafone to deposit rupees 2,500 crore in three weeks and a bank guarantee of rupees 8500 crore in eight
weeks. The Supreme Court's ruling came out in the ongoing case in which the UK
based telecom giant challenged capital gains tax of rupees 11,000 crore from its
acquisition of Hutchison shares. The bench headed by Chief Justice S.H. Kapadia,
justice K.S. Radhakrishnan and justice Swatanter Kumar, also held that if the
case goes in favour of Vodafone then the government will have to return the amount
to the telecom giant along with interest. The apex court also directed the Director
General of international taxation to file an undertaking before the court that
the government would refund the amount along with the interest to Vodafone if
the UK based telecom giant succeeds in the case. The apex court would start its
final hearing in this matter from February 5, 2011. Earlier on October 25,the
Supreme Court adjourned the hearing after Vodafone sought time to go through its
tax notice sent by the IT department and to file its reply. Following the instructions
of the apex court, the Tax Deducted at Source (TDS) officials of the Income Tax
department had fixed Vodafone's liability on the overseas transaction. The department
held Vodafone liable for not deducting tax at source on capital gains accruing
to Hutchison and claimed over rupees 11,000 crore in tax and as a penalty on the
2007 deal. Hutchison's telecom business in India comprised a substantial chunk
of its overall business and the deal enabled Vodafone to enter the Indian market
in a big way.
