SC asks tax office to hold off penalty: Vodafone

NEW DELHI, INDIA: India's Supreme Court on Friday asked the country's tax office to restrain from enforcing penalties on Vodafone until an order is passed after a case hearing in July, but allowed it to continue with its proceedings, the British firm said.

Vodafone had filed a petition with India's top court seeking protection against a notice from the tax authority starting penalty proceedings on the company related to a tax bill over its 2007 acquisition of a controlling stake in a mobile firm.

Vodafone is contesting a $2.5 billion withholding tax bill over its Hutchison acquisition and had appealed to the Supreme Court challenging a lower court order that said the Indian tax office had jurisdiction over tax bills in cross-border deals.

The Supreme Court is scheduled to hear the case on July 19.

The tax office had raised the $2.5 billion tax demand last October and had asked Vodafone to make payments within 30 days.

Last month, the tax office initiated penalty proceedings against Vodafone. Potential penalty could amount to 100 per cent of the tax, Vodafone has said.

In a statement on Friday, Vodafone reiterated that it would take all steps to defend itself and its investors against the tax authority's actions.