New Delhi: India's Supreme Court on Monday denied relief to Britain-based telecom major Vodafone on its petition contesting a lower court verdict on a $2.6-billion capital gains tax claimed by the administration.
The apex court declined to stay the Bombay High Court order that directed Vodafone to pay the tax liability towards its $11-billion acquisition of Hutchison Whampoa's 67 per cent stake in the telecom venture in India.
The verdict was delivered by a bench headed by Chief Justice S.H. Kapadia.
The court asked the income tax department to decide the liability within four weeks, not to impose levy on any penalty and granted Vodafone the liberty to approach if it feels aggrieved by the assessment.
The next hearing is scheduled for October 25.
The order also sets a precedent for global firms that have bought Indian companies. Similar demands have been made from breweries giant SABMiller, GE, and AT&T for their acquisitions in India over the past few years.
The tax authorities contended that the Vodafone deal was liable to be taxed for capital gains, since the assets of the acquired company were based primarily in India.
The administration said it was incumbent on the buyer to withhold such levy and pay it to the exchequer.
The Bombay High Court had said the income tax authority's order cannot be seen lacking the jurisdiction, after concluding hearing the arguments last month.
Vodafone, tax, Bombay High Court, Supreme Court