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Vodafone tax row: Co to be served another show cause notice

Published on Wed, Sep 02, 2009 at 21:24 | Source : CNBC-TV18

Updated at Thu, Sep 03, 2009 at 10:13

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In a latest development in the Vodafone tax tussle, CNBC-TV18's Ashwin Mohan learns that the probe by the revenue authorities has entered its final stages. However, the eagerly awaited order from the taxman on its jurisdiction in the case could take longer. That's because, the company is likely to be served with further show cause notice from the revenue authorities after the third week of September. "The notice may indicate Hutch's assets located in India. It is likely to question the Foreign Investment Promotion Board's (FIPB's) nod sought for deal."

However, the sources added that the company would get a chance to respond to notice, which would, most likely be included in the final order.

The final order is expected in three to four weeks post the company's response, said sources, adding, the order may go beyond the jurisdiction aspect.

However, Vodafone remained unavailable for comments.

Here is a verbatim transcript of his comments on CNBC-TV18. Also watch the accompanying video.

It was back in January this year when the Supreme Court has first directed the taxman to revert on their jurisdiction in this mega Hutch-Vodafone deal. There has been a lull period for seven months and investigation has been going on from the taxman's side.

According to sources the Vodafone investigation by the revenue authorities has entered its final stages and there will not be a final order as of now. What we pick up from sources is that Vodafone will be issued a further show cause notice sometime around the third week of September. According to the sources, Vodafone will be given time to respond to this notice.

This notice is likely to indicate and reiterate that Hutch's assets are indeed located in India. In fact that has been the argument of the taxman right through the Bombay High Court proceedings as well.

Another indication that we have received about what might be included in this notice is that this notice is also likely to question the FIPB's approval which has been sort for the Hutch-Vodafone deal. So those are two details which we are picking up from our sources.

Another response which we picked from our sources is that response to this show cause notice which will be issued by the income tax department is likely to be incorporated in this final order.

We understand from our sources that three to four weeks post Vodafone's response this final order will be out and we also understand that this final order may also go beyond the scope of jurisdiction.