Bombay HC asks Vodafone to deposit additional Rs5 cr in tax case

The Bombay High Court on Monday directed telecom major Vodafone India to deposit with it an additional amount of Rs five crore before March 31, in connection with an over Rs 77-crore tax demand, while the Income Tax department decides on the company's rectification application.

The division bench headed by Justice DY Chandrachud was hearing the petition filed by Vodafone, challenging the March 21 notice by the Income Tax, demanding over Rs 77 crore in unpaid taxes.

Vodafone, which on Saturday deposited Rs 10 crore, will have to deposit another Rs five crore. If the additional amount is deposited, then no coercive steps will be taken by the income tax department.

The court also directed the assessing officer of IT to hear and decide within 12 weeks the application filed by Vodafone, seeking rectification of the tax amount demanded.

The IT department alleges that Vodafone defaulted on a tax payment of Rs 60 crore and interest of Rs 17 crore. The authorities held discounts offered by the company to distributors and roaming charges levied on customers as taxable.

The company, however, is disputing the levy, claiming that it amounts to double taxation. The IT had also asked for immediate payment of Rs 77 crore within 15 days, so Vodafone moved the High Court.

The company recently won a landmark legal battle in the Supreme Court on its challenge to IT's demand of capital gains tax following its purchase of Hutchison Essar's stake in India.