Vodafone fights $2bn tax claim

Vodafone argues the Indian authorities have no jurisdiction over the deal

Mobile phone giant Vodafone is fighting a $2bn (£1bn) tax claim stemming from its purchase of a controlling stake in India's Hutchison Essar last year.

Indian authorities say the British firm is liable for capital gains tax on the $11.1bn deal as Hutchison Essar's assets are based in India.

But Vodafone maintains the deal was done between two non-Indian companies.

It is seeking an injunction against a request from the Indian tax authority for information about the deal.

Vodafone maintains that the Indian authorities have no jurisdiction over the deal as it took place between Vodafone Group, registered in Holland, and a Hutchison company registered in the Cayman Islands.

Vodafone bought a majority stake in Hutchison Essar India in March last year, as part of its strategy to expand in developing countries where mobile phone use is growing rapidly.

The company says that it wants to become the top mobile provider in India by 2010.

The case is due to begin in Mumbai later on Monday. If it goes ahead as planned, a judgement is expected in a number of weeks, a Vodafone spokesperson said.