The Supreme Court today refused to offer any immediate relief to Vodafone, which has challenged the Bombay High Court order allowing the government to tax the company's USD 11 billion deal with Hutch.
The tax department had raised a demand for Rs 12,000 crore as tax on the 2007 deal, worth about Rs 55,000 crore.
While refusing to stay the high court order, the apex court issued notices to the tax authorities directing them to decide within four weeks the liabilities of Vodafone.
"Pending the hearing and further orders, we direct the TDS officer to decide within four weeks from today on the tax liability," a bench headed by Chief Justice S H Kapadia said while issuing a notice to the I-T Department.
However, the bench refused the plea of Vodafone's counsel and senior advocate Harish Salve seeking a stay on the High Court's judgment, saying that it would have to deposit a part of the tax demand amount first.
"If you want a stay on the High Court judgment... You have to pay part of the amount. The choice is yours," the bench said while asking the counsel not to press for the stay.
The court has scheduled the next hearing on the matter on October 25 and said on the basis of this order, liberty was given to the petitioner (Vodafone) to approach the court for an appropriate remedy.
Attorney General G Vahanvati, appearing on behalf of the government, said the department will pass an order within four weeks determining the liability of the telecom major.
Vahanvati contended that the court could only pass an order staying the judgment if the telecom major deposited 50 per cent of its liability. .
Earlier, Vodafone International had moved the apex court against the high court order, which dismissed its petition challenging the Indian authority's demand for Rs 12,000 crore in taxes on the Hutchison deal.
The High Court division bench had held that the I-T Department has the jurisdiction to tax the transaction.
"The transaction has a sufficient nexus with India and the IT (Department) has the jurisdiction to levy tax on the transaction," said the High Court verdict.
Hutchison's telecom business in India comprised a substantial chuck of its overall business and the deal enabled Vodafone to enter the Indian market in a big way.
The High Court, however, gave liberty to Vodafone to argue before the tax department that no penalty should be imposed, as they genuinely believed they had no liability to deduct tax at source while making payment to Hutchison.
The department held Vodafone liable for not deducting tax at source on capital gains from the Hutchison acquisition and claimed around Rs 12,000 crore in tax and penalty for the 2007 deal.