The income tax department is seeking to reopen the case it lost against British telecom major Vodafone and wants the matter heard afresh by a larger bench. In January 2012, the Supreme Court had rejected the department’s demand for $2.2 billion tax over the British company’s acquisition of Hutchison’s stake in Hutch-Essar in 2007.
The department, while challenging a different Gujarat High Court order in the Supreme Court on Monday, sought a larger bench to hear the case related to the Vodafone-Hutch cross-border deal that created Vodafone-Essar.
Solicitor general RF Nariman argued that the government’s 100-page review petition listing 130 grounds was not considered by the apex court. He said that “things were put in his mouth” in the high-profile tax case; so the impugned judgment was liable to be heard afresh on the ground of non-consideration itself. The SG also claimed that additional documents, which support his case, have also come to light and will be filed soon in the court.
While the bench headed by chief justice Altamas Kabir permitted the government to file additional documents, Vodafone senior counsel Harish Salve opposed reopening of the case, saying the Gujarat HC had given relief to the firm after relying on the apex court’s January judgment.
The government had introduced retrospective changes in tax laws in Budget 2012-13, seeking to overcome the ruling. With foreign investors expressing concerns, it subsequently set up a panel to review the change in law asserting Indian jurisdiction to tax cross-border deals involving Indian assets.
On January 20, the top court had ruled that Vodafone— which bought Hutchison Telecommunications’s 66.98% stake in Indian telecom firm Hutch Essar for $11.2 billion (around R52,300 crore) in an entirely offshore deal in May 2007 — could not be taxed since the law did not explicitly provide for taxing offshore transactions.
The Finance Bill 2012 had proposed that notwithstanding any judgment from the apex court or any tribunal, the retrospective amendments would enable the government to keep alive all its tax demands and not return anything which it had collected as levy pursuant to the proposed change in law.
Petitions against the amendment are pending before three different high courts.