Vodafone wins India tax case

India's tax office has no jurisdiction over Vodafone's purchase of mobile assets in India, the Supreme Court ruled today.

The telecom giant that has been fighting a $2.2 billion (€1.7 billion) tax bill in a long-running dispute anxiously watched by foreign investors in India.

Vodafone, challenging the tax bill over its $11 billion deal to buy Hutchison Whampoa Ltd's Indian mobile business in 2007, had appealed to the Supreme Court after losing the case in the Bombay High Court in 2010.

The Supreme Court has asked the tax office to refund 25 billion rupees (€384 million) with 4 per cent interest to Vodafone, a lawyer for the British telecom company told reporters.

The world's largest mobile operator by revenue had said it believes Indian tax office has no right to tax the transaction between two foreign entities, and even if any tax is to be paid, it should be paid by the seller not the buyer.

Indian authorities had said the deal was liable for tax because most of the assets were based in India and because under local tax law, buyers have to withhold capital gains tax liabilities and pay them to the government.

Vodafone's India unit is currently the country's third-largest mobile carrier by subscribers and has the second-largest revenue market share.

Reuters