Indian tax authorities on Friday presented global telecom giant Vodafone Group Plc with a 2.52-billion-dollar tax bill for a 2007 acquisition, this time backed by a court order , dpa reported
The company had originally refused to pay the taxes, but the Bombay High Court in September ruled that capital gains taxes were due on the purchase of the Indian assets of Hong Kong's Hutchison Telecommunications International Ltd.
"The Income Tax department today issued an order raising a tax demand of 112.18 billion rupees on Vodafone International Holdings BV treating it as an assessee in default," the tax office said in a statement.
Netherlands-based Vodafone Holdings was the part of the group which carried out the acquisition.
Vodafone had said it bought Hutchinson Essar Ltd from a holding company based in the Cayman Islands, and that therefore no business had been done in India and no taxes were due there.
In September's ruling, the Bombay High Court dismissed the plea, siding with the tax authorities' argument that, as an Indian company had changed hands, the deal had an "Indian nexus" and was subject to taxation by Delhi.
On Friday, Vodafone said it "continues to believe that it is not liable for any tax on this transaction involving the transfer of a company outside of India.
"Further, Vodafone was the acquirer and not the vendor and has made no gain on the transaction," it said.
An appeal against September's ruling is before the Supreme Court, which has refused to stay the Bombay High Court order. The next hearing was scheduled for October 25.
The tax battle has been closely watched by multinational firms in Europe and the United States, as it could set an important precedent for merger and acquisition activity in the fast-growing Asian nation.
But the case has so far "not impacted foreign funds inflow," Mumbai's Central Board of Direct Taxes Chairman S S N Moorthy was quoted as saying by the PTI news agency.
India's mobile phone market is expanding at a robust pace, with total connections estimated at over 650 million, according to the Telecom Regulatory Authority of India.
India overtook the US in 2008 to become the second-largest mobile telecom market after China, which has nearly 800 million connections.
Some observers predict India to take first place by 2013, thanks in part to the increasing use of several SIM cards - and several connections - per customer