Telecom major Vodafone International Holdings BV, which is facing tax liability and penalty, said it will take all appropriate steps to defend itself and its investors against the latest “unwarranted action” from the Income-Tax Department.
In a statement on Friday, the company said, “Vodafone is surprised by the tax office's actions, especially as Indian law precludes the tax authorities from imposing penalties in cases where the assessee has acted on reasonable legal advice in view of past tax precedent in India or the issue of imposition of tax is being decided for the first time by courts of law in India.”
Vodafone had moved the apex court to block the I-T Department's penal action on the contested $2.5-billion tax bill relating to its 2007 acquisition of the Indian telecom assets of Hutchison Telecommunications International Ltd (HTIL).
The Supreme Court on Friday asked the Department not to enforce any penalty order against Vodafone till further orders by it in the tax dispute.
The Vodafone statement added that, “It is also difficult to understand the rationale behind the tax authorities seeking to impose penalties on a matter which the tax authorities have, themselves, described as a ‘test case'.”
“Established tax laws are being reinterpreted in a completely new way and there are no previous examples of such taxes being imposed in India on an overseas share transfer such as this,” the company said.