Feb. 17 (Bloomberg) -- India’s government today filed a petition to review a decision by the Supreme Court that held Vodafone Group Plc. was not liable to pay $2.3 billion in taxes on its purchase of Hutchison Whampoa Ltd.’s local operations.
The petition seeks to overturn the Jan. 20 ruling, which said the government can’t seek capital gains tax from Vodafone, the world’s biggest mobile-phone operator, for the 2007 acquisition of Hutchison’s wireless assets because the transaction occurred outside Indian tax jurisdiction.
The ruling, delivered by a panel headed by Chief Justice S.H. Kapadia, ended more than four years of uncertainty over whether investors based outside the country can use offshore holding companies to avoid paying Indian taxes. Vodafone Chief Executive Officer Vittorio Colao has said the case was one of the key issues that needed to be resolved in the region before the company could consider publicly listing its local unit.
Supreme Court rules permit an aggrieved party to file a petition for review within 30 days of the judgment. The case will be heard on Feb. 27, according to the Supreme Court registry.
Vodafone India is aware of the review petition, which will be evaluated by the same panel judges that gave the Jan. 20 ruling, and has no further comment, according to an e-mailed statement today.
Newbury, England-based Vodafone and Hutchison conducted their $10.7 billion transaction offshore, with Vodafone’s Dutch subsidiary, Vodafone International Holdings BV, acquiring CGP Ltd., a Cayman Islands-based holding company controlled by Hong Kong-based Hutchison.
The Indian tax department in September 2007 sought 112.2 billion rupees ($2.3 billion) in capital gains tax, saying Vodafone should have withheld that amount from its payment to Hutchison.
“Such imposition of tax amounts to capital punishment on capital investments,” Justice K.S. Radhakrishnan said in the Jan. 20 ruling.
Vodafone is India’s third-largest wireless operator, with 148 million subscribers and a 17 percent share of India’s 894 million mobile-phone accounts at the end of December, according to the nation’s telecommunications regulator.
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