Govt studying ruling on Vodafone tax dispute

NEW DELHI, INDIA: The Indian government is studying the Supreme Court verdict on UK telecom Vodafone's $2.2 billion tax liability and will take appropriate action accordingly, Finance Minister Pranab Mukherjee said on Wednesday.

"We are studying it. I can't say whether I or the finance ministry is disappointed or happy with the judgment," Mukherjee said in an informal chat with mediapersons at a lunch hosted by him.

Also read: Vodafone wins multi-crore tax case

In a landmark judgment, the Supreme Court last week said Indian tax authorities had no jurisdiction over transactions abroad and quashed the Income Tax department's demand of capital gains tax from Vodafone pertaining to its majority buy of Hutchison Essar in 2007.

Income tax authorities had claimed Rs.11,218 crore ($2.2 billion) in the form of capital gains tax from the world's largest telecom operator Vodafone.

Finance Secretary R.S. Gujral said the apex court verdict was "disappointing" for the tax authorities and it would have huge financial implications.

"Financial implications will be huge. This is linked not only to Vodafone but also related to other similar cases."

Among other deals under the IT department's scanner are global telecom firm AT&T's stake sale in Idea Cellular to Tata. The Tatas later exited Idea, but the tax liability issue is still pending before the Bombay High Court.

Another one is GE's sale of majority stake in one of India's biggest outsourcing firm Genpact. The $500 million transaction for 60 per cent stake bought by US-based private equity companies, General Atlantic and Oak Hill Partners, was completed overseas.