Essar seeks $883-mn refund from Vodafone: Report

The Essar group is seeking a refund of the $883 million (Rs4,426 crore) Vodafone Plc withheld as tax to pay the income-tax department, while it bought a 22-per cent stake in Vodafone Essar from Essar, according to a report in Business Standard.

The move fllows the Supreme Court verdict clearing Vodafone of any tax liabilities on its acquisition of a controlling stake in Hutch Essar from Hong Kong's Hutchison Whampoa.

The court said the 2007 deal was structured as a transaction between two foreign entities. Essar had held 33-per cent stake in that company.

Last July, Essar Communications and Essar Com, both wholly owned subsidiaries of Essar Communications (Mauritius) Ltd, sold their 22 per cent stake in Vodafone Essar to the Vodafone Group, as part of a larger deal that saw Vodafone buy out Essar's total 33-per cent stake in Vodafone Essar, which is being transferred to Vodagone Plc.

Under the pact, Vodafone paid Essar, but withheld an additional Rs4,426 crore as tax to be paid to the government.

Both companies had then said they believed there was no tax due on the deal, but felt it was ''prudent'' to deduct and pay withholding tax, and then have Essar Communications and Essar Com claim a refund.