Hong Kong firm shares details of latest tax bill from Indian authorities linked to 2007 unit sale to Vodafone, insists it will not pay up.

The Indian government is still trying to boost its coffers by generating tax revenue from the sale of Hutchison Essar to Vodafone a decade ago.

The country fired its latest salvo earlier this month, sending CK Hutchison a penalty notice for 79 billion rupees (€1 billion), the Hong Kong-based company revealed in a stock exchange announcement on Monday, in which it made it clear it does not intend to pay up.

That sum is in addition to the INR79 billion tax bill India presented to CK Hutchison earlier this year, which also carried a demand for interest in the sum of INR164.3 billion.

All told, the Indian government wants CK Hutchison to pay INR322.3 billion (€4.18 billion) to settle what it claims is its liability in relation to its sale to Vodafone.

Vodafone acquired a majority stake in Indian mobile operator Hutchison Essar for US$11.1 billion in May 2007, a deal that marked its entry into India and Hutchison’s departure.

India demanded $2.2 billion in capital gains tax, but since the transaction was carried out between two off-shore entities – Vodafone’s Dutch subsidiary and Hutchison Essar’s investment vehicle, registered in the Cayman Islands – it was unable to collect.

Undeterred, after years in court, in 2012 India introduced a retroactive change to its tax laws in order to bill Vodafone.

The battle continues. Vodafone has consistently insisted that it is not liable to pay tax on the deal, and Hutch is sticking to that line with regard to this latest demand for cash.

"HTIL (Hutchison Telecommunications International Ltd) continues to believe that the taxes cannot be validly imposed on HTIL," the firm said.

It noted that the repeated demands for money from India’s tax authorities, based on the retrospective legislation imposed in 2012, "are in violation of the principles of international law."