In a setback for the government, the Supreme Court on Tuesday dismissed its plea
seeking a review of its verdict quashing the income tax order
asking telecom giant Vodafone
to pay Rs.11,218 crore ($2.2 billion) tax for acquiring a 67 percent stake in Indian telecom services major Hutch Essar.
A bench of Chief Justice S.H. Kapadia, Justice K.S. Radhakrishnan and Justice Swatanter Kumar dismissed the government's plea after considering it in their chamber.
Indian tax authorities on Friday filed a review petition in the apex court on its verdict in the tax dispute favouring the telecom service provider.
The case involved a levy on a 2007 transaction in which Vodafone
Plc paid had $11.2 billion to Hong Kong-based Hutchison for acquiring a 67 per cent stake in Indian telecom services major Hutch Essar.
The Supreme Court last month had ruled in favour of Vodafone saying that Indian tax officials did not have jurisdiction over a deal between two global companies even if assets involved in that deal were located in India.
In its judgment on January 20, it had set aside an earlier Bombay High Court order that had upheld the tax demand by income tax authorities on account of the said acquisition.
The finance ministry in its review petition criticised the judgment for saying that the transaction between Vodafone Plc and Hong Kong-based Hutchison was a bonafide FDI investment in the country.
The review petition contended that there was no inflow of the foreign investment in the country in the said transaction.