Vodafone’s long-running $2b battle with Indian tax authorities over an acquisition it made three years ago looks set to head back to court after India’s Income Tax Department served it a new notice on Monday.

The Supreme Court in January last year ordered the tax department to re-examine the case, which centers on whether Vodafone should have paid tax on its $11b acquisition of Hutchison Essar, India’s third largest mobile phone operator, in 2007.
The “Supreme Court granted Vodafone the right of appeal to the Bombay High Court if we disagree with the tax authorities’ determination,” Vodafone said in a statement on Monday. People familiar with the matter said it was likely to appeal against the notice immediately.
India’s tax department argues that even though Vodafone was the buyer and Hong Kong’s Hutchison was the seller of Hutchison Essar, the UK group should have withheld an estimated $2b of capital gains tax on the deal on the government’s behalf.
Vodafone has countered by saying the sale of shares took place overseas between offshore companies, which under past practice would have exempted the transaction from Indian jurisdiction.
(Source: Ft.com)