NEW DELHI: The income tax (I-T) department has raised a tax demand of Rs 32,320 crore (tax dues, interest and penalty) on Hutchison Telecommunications International (HTIL), after having failed to recover the tax from Vodafone Inc for purchasing 67 per cent stake from HTIL in 2007.
CK Hutchison Holdings has informed the Hong Kong Stock Exchange that its subsidiary HTIL on August 9, 2017 received a notice dated July 7, 2017 sent by the Indian I-T department demanding a tax of Rs 7,900 crore, and interest of Rs 16,430 crore and another Rs 7,900 crore in penalty.
The Hong Kong business group also informed the exchange that on February 13, 2017, it had received a notice dated January 25, 2017 from Indian authorities. It told the exchange it does not own any tax in India.
CK Hutchison Holdings pointed out that the case relates to a notice dated November 24, 2016 from the Indian tax authorities “on the alleged gains in respect of the acquisition in 2007 by Vodafone International Holdings B.V. of the entire issued share capital of CGP Investments (Holdings) Ltd from HTIL Holdings Ltd, an indirect wholly owned subsidiary of HTIL”. Explaining the complex deal, it said CGP held a chain of companies, some of which carried on telecombusiness in India.
In 2012, after India introduced retrospective tax, Vodafone was asked to pay a tax and penalty for its 2007 purchase of its Indian assets, even if the transaction was done abroad. This was opposed by Vodafone and the case is pending at the International Court of Arbitration.
The CK Hutchison Holdings note to the Hong Kong Stock Exchange states, “For the reasons set out in the announcement, HTIL continues to believe that the taxes cannot be validly imposed on HTIL. The legal advice obtained by HTIL continues to be that the above-mentioned orders of the ITA issued on the basis of retrospective legislation seeking to overturn the judgment of the Supreme Court of India in January 2012, which ruled that the acquisition was not taxable in India, are in violation of the principles of international law.”It added that these orders will not have any effect on the company’s financial condition or the results of its operations for any period.