Vodafone Judgement Today?
THE Supreme Court of India is likely to deliver the much-awaited Vodafone case today. The Supreme Court is to lay down the law on the taxation of offshore mergers and acquisitions of Indian companies in the legal challenge to the tax demand on Vodafone International's acquisition of Hutchison Essar's telecommunication business in India from the Hong Kong based Hutchison Group, which was heard by a three-judge bench headed by the Chief Justice. International Tax Review adds, “This is probably the first case of its kind being heard by the highest judicial authority, not only in India but anywhere in the world, and the judgment in this landmark case is likely to have a decisive impact on the future development of international tax jurisprudence. At a time when several multi-billion dollar cross-border M&A transactions are coming under the scanner of revenue authorities, this judgment is likely to lay down the marker for revenue authorities and tax practitioners everywhere on the taxation of such transactions.
The Income Tax Demand against Vodafone is to the tune of Rs. 11,000 Crores of which the Supreme Court had asked Vodafone to pay Rs. 2500 Crores in cash and for the balance Rs. 8500 Crores, they had to give a bank guarantee.
Consequences:
If the Government wins: Vodafone will have to pay an additional amount of Rs. 8500 Crores with interest at the rate to be fixed by the Court.
If Vodafone wins: It will get back Rs. 2500 Crores with interest at the rate to be fixed by the Supreme Court.
A big case indeed for both sides!