Indian top court asks Vodafone for deposit in tax case

15th November 2010, Comments 0 comments

India's top court on Monday asked Vodafone to deposit 25 billion rupees (554 million dollars) in a closely watched tax case stemming from the British mobile giant's purchase of an Indian firm.

The order by a three-judge bench of the Supreme Court came after Indian tax officials last month slapped Vodafone with a 2.53-billion-dollar bill -- including interest.

The tax demand stems from Vodafone Group's 11.1 billion dollar purchase in 2007 of a majority stake in Indian cellular phone company Hutchison Essar, since renamed Vodafone Essar.

The Supreme Court told Vodafone to pay the 25 billion rupees to the court registry within three weeks and deposit a bank guarantee worth 85 billion rupees in a state bank in eight weeks.

The battle is being closely watched by international investors as experts say the case could have implications for big-ticket purchases of Indian firms by foreign companies.

The court set February 24 as the final date for hearing an appeal by the company.

Vodafone has said it "strongly disagrees" with the tax calculation.

The money would be repaid to Vodafone if the British company wins the case, the court said.

Vodafone chief executive Vittorio Colao has said the outcome of the dispute could be a key factor in determining the company's future investments in India.

Colao also said it was "very important to have an outcome here that establishes a principle for the future. This is a concern for our investors and for other international investors."

The Vodafone battle comes as Indian authorities are scrutinising tax aspects of other international deals.

SABMiller, the world's second-biggest brewer, has a tax case pending over its 120-billion-dollar acquisition in 2006 of the Indian arm of Foster's from the Australian drinks group.

-- Dow Jones Newswires contributed to this report --

© 2010 AFP

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