SC Squashes Govt claim In Vodafone Tax Case

The Supreme Court on Friday set aside the government’s claim that Vodafone’s India purchase of Hutchison Telecommunications India businesses were taxable under Indian law. 

The order marks a huge victory for Vodafone and ends four years of uncertainty over the payment of capital gains tax. More importantly it clarifies an important point of law: Whether the sale of shares between companies not incorporated in India is taxable in India. Vodafone, on its part, had steadfastly held that it was not liable to pay tax.

The Supreme Court also asked the government to return with interest Rs. 2,500 crore that Vodafone had deposited with the tax department pending its appeal. The majority verdict was delivered by Chief Justice Kapadia with Justice Swatanter Kumar. Justice K.S. Radhakrishnan differed with the judgement.  

Watch this space for more once the final order is released.