Photographer: Anthony Kwan/Bloomberg

CK Hutchison Unit Receives $1.2 Billion Tax Notice From India

  • The group contiues believe taxes can’t be validly imposed
  • Penalty tax links to 2007 Indian business sales to Vodafone

A unit of billionaire Li Ka-shing’s CK Hutchison Holdings Ltd. received a formal 79 billion rupee ($1.2 billion) tax bill from India over the company’s sale of its mobile-phone business in the country to a Vodafone Group Plc unit a decade ago.

CK’s Hutchison Telecommunications International Ltd. received the penalty order from the Indian Tax Authorities on Aug. 9, after receiving an assessment order from India for a similar amount in February, according to a filing with the Hong Kong stock exchange on Monday. The CK Hutchison unit continues to dispute the validity of those taxes, it said.

The move is the latest in a decade-old saga that’s engulfed Vodafone and CK Hutchison over an $11 billion transaction that occurred in 2007. The dispute has also been seen by analysts as a test case that may influence foreign investors’ perceptions about doing business in India.

The dispute traces back to Vodafone’s acquisition of a 67 percent stake in the mobile-phone business owned by Hutchison Whampoa, now part of CK Hutchison. While Vodafone has said it doesn’t owe the Indian government money because the transaction was conducted offshore, Indian authorities have sought to collect taxes on the deal because it involved the assets in the country.

CK Hutchison shares fell 0.9 percent to HK$100.80 in Hong Kong before the statement.

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