The Income Tax department today issued a detailed notice to Vodafone International Holdings BV under section 201 (1) and 201 (1A) of the IT Act 1961 asking the company to show cause as to why it should not be held that the Department has competent jurisdiction to proceed against it for the default of non-deduction of tax at source from the payment of USD 11.2 billion made on 8th May 2007 to Hutchison Telecommunications International Ltd (HTIL) for transfer of interest in the Indian company Hutch Essar Ltd (HEL).

Vodafone had challenged an earlier notice in the Bombay HC. The writ petition was dismissed with costs on December 3, 2008. Subsequently Vodafone filed a special leave petition before the SC against the order of the High Court.

On 23rd January 2009, the apex court dismissed the appeal of VIH BV with the direction that they should subject themselves to the jurisdiction of the assessing officer with the liberty to “Question the decision of the authority on the preliminary issue before the High Court, in the event the same is decided against it ”.

The date fixed for compliance of the notice is 16th November 2009.

Vodafone faces a $ 1.7 billion tax over the issue.