I-T dept seeks Rs 32,320 cr from Hutchison over its 2007 deal with Vodafone
The income tax department has slapped a claim of Rs 32,320 million in taxes, interest and penalties at Hutchison’s Hong Kong-based for its alleged capital gains it has had on the sale of its 11 billion mobile company in India to the Vodafone Group of the United Kingdom in 2007.
In a document submitted to the Hong Kong billionaire stock exchange Li Ka-shing of Hutchison CK Holdings Ltd said that its unit, Hutchison Telecommunications International Ltd (HTIL) was notified of a demand of about Rs 7.900 crore in taxes, Rs 16,430 crore as interest, and another Rs 7,900 crore in penalty.
CK Hutchison’s unit continued to challenge the validity of these taxes, he said. This is the first time that the Hong Kong tax application has been increased. So far, the Indian government had followed the Vodafone tax.
Vodafone was fined for the first time with a tax claim of Rs 7.99 billion rupees in order not to withhold tax payments it made to Hutchison. The exceptional after including the interest and the penalty is more than 20,000 crures.
He challenged the rate and the Supreme Court in January 2012 ruled that the company was not required to pay tax on the acquisition of assets in India Hutchison.
Subsequently, the government in May 2012 changed the tax laws with retroactive effects and required taxes. Vodafone challenged this rate and the question is referred to an international arbitration panel.
In addition to Vodafone, retrospective legislation has been used to impose greater tax liability of Rs 10,247 crore on another British company Cairn Energy Plc. This issue is also referred to an international arbitration panel.
HTIL, a wholly-owned indirect CK of Hutchison Holdings Ltd, received the tax office for a November 24 tax bill, claiming for the year 2016 the proceeds from the sale of its entire 67 percent stake in the Indian company on Vodafone.
“HTIL term between February 13, 2017, the assessment of income tax on a car dated January 25, 2017 in relation to the tax of about Rs 7.900 crore in capital gains” in the 2007 transaction frame plus the general interest of about Rs 16,430 crore, “according to the document.
In addition, “HTIL received August 9, 2017, the Tax Administration on the admission of a penalty order dated July 3, 2017 and a fine of about Rs 7.9 billion rupees,” he added.
Taxes can not validly imposed HTIL, according to the applicant, who added that the order issued by the ISR based on the retroactive legislation to annul the Supreme Court of India in January 2012, which ruled that the acquisition ( Vodafone) was not exempt from taxation in India, they are in violation of the principles of international law. ”
“Accordingly, the company continues to believe that order would have no effect on the company’s financial situation or the results of its operations for some time,” he said without saying what course of action to take.
In 2007, Vodafone acquired a 67 percent stake in the mobile phone business owned by Hutchison Whampoa, which is now part of CK Hutchison. The evaluation project included earnings of around Rs 37.4 billion in sales between 2007 and Vodafone International Holdings BV.
The agreement came about when HTIL was a listed company. Subsequently, HTIL was privatized and ceased operations. Neither Htil nor its subsidiaries have a presence in India.