Indian court orders Vodafone to pay $550m

Dylan Bushell-Embling
16 Nov 2010
Daily News

Vodafone will be forced to front 25 billion rupees ($554.2m) of the disputed funds in its court battle with India's tax authorities, even while it continues to fight the claim.

India's Supreme Court ordered Vodafone to pay the deposit - and make bank guarantees for the remainder of the 112.18 billion rupee ($2.5b) tax claim - within the next eight weeks, FT.comsaid.

The trial itself has been adjourned until February 24 next year. Vodafone will be returned the deposit in full, with interest, if it wins the case.

Vodafone is appealing a tax claim over its acquisition of Hutchison's 67% stake in what is now Vodafone Essar, in a 2007 deal worth $11 billion.

The company maintains that the transaction should not be taxable because it was conducted overseas. Vodafone made the transaction via a Dutch subsidiary, purchasing the stake indirectly held by a Cayman Islands entity run by Hutchison.

The Dutch government has separately intervened in the case on behalf of that subsidiary, FT reported. It is seeking an out of court settlement based on the countries' double tax avoidance agreements.

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