(Financial Express via NewsEdge) India's income tax department on reiterated its stand that British telecom giant Vodafone was liable to pay tax for acquiring a majority stake in Hutch Essar.
'Vodafone is the payer in this case. So it has the liability of payer,' GC Srivastava, director-general in the finance ministry said.
Speaking on the sidelines of the fourth international tax conference by Assocham, he said the liability of payer and payee was different and Vodafone had the liability of the payer.
Simply put, this would mean that Vodafone should have deducted tax at source before making payment to Hutchison.
Vodafone CEO Arun Sarin had, however, said last week that Vodafone had no tax liability in India.
'Neither the Essar Group, nor Vodafone, nor Vodafone Essar is liable to pay taxes. It is the seller who should be taxed; and the seller is not one of the parties represented here,' Sarin had said.
The income tax department has sent a notice to Vodafone, seeking around $1.7 billion as capital gains in the $11.2-billion acquisition of Hutchison Telecom International's 67% stake in Hutch-Essar, now renamed Vodafone-Essar.
However, the company has contested this notice and approached the Bombay High Court.
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