The Supreme Court has directed UK telecom major Vodafone to appear before the Income Tax (IT) Department which had instructed the company to pay penalty in the USD 2 billion tax case relating to the telecom major’s stake purchase in Hutchison-Essar.
Earlier, the I-T department had issued notice to Vodafone in March saying penal action would be initiated against the British telecom major in the tax case. Vodafone in 2007 had purchased 67 per cent stake of Hutchison in Hutchison Essar for over USD 11 billion. The Income Tax (I-T) Department had raised a demand of about USD 2 billion on Vodafone as it failed to deduct (withhold) tax at the time of stake purchase.
A three-judge bench headed by Chief Justice S H Kapadia asked the company to file its representation before the IT department.
The court also made it clear that if the IT Department passes any order for penalty, it would not be enforced till Supreme Court’s further order as the main matter of tax dispute is still pending in the apex court.
During the proceedings, the Supreme Court told telecom major Vodafone that tax penalty is at an initial stage because only notices have been issued till now by the IT Department to the company.
“They (IT Department) are asking you (Vodafone) to appear only. You go and appear and put your representation there. Let them pass order,” the bench said.