India’s tax department has jurisdiction over tax bills in cross-border mergers, a court ruled yesterday, dismissing a petition by Vodafone and setting a precedent for foreign firms looking to buy into Indian companies.
The Bombay High Court ruling came as foreign firms show renewed interest in acquiring Indian companies, lured by growth prospects in the world’s second-fastest growing major economy.
Vodafone, fighting a tax bill in India from its 2007 purchase of Hutchison Whampoa’s mobile business in the country, had filed an appeal with the court in June challenging the tax department’s jurisdiction over the bill.
After the court ruling, Vodafone said it remained confident that there was no tax to pay on the transaction. The company said it needed time to review the judgment and consider its next step that includes an appeal to the Supreme Court.
“Vodafone is seeking legal advice to challenge this part of the judgment,” the FTSE 100 group said in a statement.
The world’s largest telecommunications operator by revenue, which paid $11.1bn (£7.2bn) for the deal with Hutchison, has not said how much the authorities were seeking.
City A.M. Reporter