The Income Tax department has issued a detailed notice today (comprising 531 pages along with annexure running into 1901 pages) under section 201(1) and 201(1A) of the IT Act 1961 to Vodafone International Holdings BV(VIH BV) requiring it to show cause as to why it should not be held that the Department has competent jurisdiction to proceed against it for the default of non-deduction of tax at source from the payment of USD 11.2 billion made on 8th May 2007 to Hutchison Telecommunications International Ltd (HTIL) for transfer of interest in the Indian company Hutch Essar Ltd (HEL).

An earlier notice issued in the matter to VIH BV was challenged before the Hon'ble High Court of Bombay in a writ petition, which was dismissed with costs on 3rd December 2008. VIH BV filed a special leave petition before the Hon'ble Supreme Court of India against the order of the High Court. On 23rd January 2009, the apex court dismissed the appeal of VIH BV with the direction that they should subject themselves to the jurisdiction of the assessing officer with the liberty to "Question the decision of the authority on the preliminary issue before the High Court, in the event the same is decided against it ".

The date fixed for compliance of the notice is 16th November 2009.

Withholding tax liability asserted under section 201 for failure to deduct tax on cross-border share transfer; show-cause required. A statutory show-cause notice was issued to Vodafone International Holdings BV under section 201(1) and section 201(1A) alleging failure to deduct tax at source on a cross-border payment for transfer of interests in an Indian company, asserting the Department's jurisdiction to proceed against the foreign payee and requiring a response by the specified compliance date.