Vodafone cleared to challenge $2bn India tax claim

The path has been cleared for mobile giant Vodafone to challenge the Indian
government’s claim for $2bn in tax following the group’s $10.7bn (£5.3bn)
purchase of a stake in Hutchison Essar.

The FT reports that since September Vodafone has been fighting to
have its case heard in India’s High Court after India’s revenue authorities
served a ‘show cause notice’ on the group for the alleged tax liability.

Andy Halford, Vodafone CFO, has always maintained that the claim by the
Indian government has no basis.

The Mumbai High Court has now confirmed that a challenge had been received
against the powers of the Indian authorities to issue the notice for the tax.
Vodafone said the final hearing was set to go ahead on March 10.

Vodafone says the transaction involved off-shore entities and that the any
tax owed should come from the seller.

Indian revenue authorities say most of the assets in the deal were located in
India and liable to Indian capital gains tax. The authorities add that in India
a buyer is also required to withhold any CGT liability and pay it.

Further reading:

Indian court adjourns Vodafone’s $2bn tax
case

Indian takeover lands Vodafone with $2bn tax
bill