Vodafone International Holdings BV v. Union of India - Tax on offshore transfers of shares holding Indian assets
The Supreme Court held that the acquisition by Vodafone of the Cayman Islands holding company (CGP) from Hutchison, which indirectly held controlling interest in the Indian telecom JV, was not taxable in India. The Court held that India lacked jurisdiction to tax the offshore transaction as there was no transfer of assets situated in India. The Court introduced the principle that tax authorities must look at the "entire transaction" and apply the "look through" principle only where expressly provided by statute. This decision prompted the retrospective amendment via Finance Act 2012 (Section 9(1)(i) and Explanation 5) - later reversed by Finance Act 2021 (The Taxation Laws (Amendment) Act 2021) abolishing retrospective tax on offshore indirect transfers.
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