Hutchison Telecommunications has now added a new angle to the controversy started by the Indian tax authorities over the tax liability case against Vodafone India. Hutchison has now admitted the Indian tax authorities’ claim against Vodafone in a document submitted with United States Securities and Exchange Commission (SEC).

IT Examiner had earlier reported that the tax authorities claimed the telco owes some $2 billion for its $11.2 billion takeover of Hutchison Essar. In the Bombay High court, Vodafone refuted the tax authorities’ claim saying that the question of paying tax to the Indian government does not arise as the deal took place between two foreign players - the Dutch group owned by Vodafone and a Hutchison company registered in the Cayman Islands.

Fearing an adverse affect on its financial health, the Hutchison report with the SEC says the company may face 'problems' if it pays the tax.

The dispute began last year after changes were made to the Indian tax structure in the budget. The first hearing didn’t last long, due to the unpreparedness of the authority.

The Income Tax department reckons Vodafone has been generating a good profit in India and would quite like it to pay a bit of tax. It had further sent a notice to Vodafone reminding the telco should have cleared the taxation matters before buying-out the company from Hutchison.

The Bombay High court witnessed a heated debate. The verdict is likely to come in the next two months after the hearing finished last week. The trial was always expected to be a long one, with the losing side appealing to the higher court regardless of which way the verdict went. But with this move from Hutchison, things may take a totally different turn.

This high profile corporate legal case can have an impact on several other companies eyeing India as investment decision. X