A landmark court challenge by Vodafone against Indian tax authorities, which want it to pay an estimated $2bn in taxes on its acquisition of Hutchison Essar, has been adjourned for three months.
The Bombay high court delayed the hearing until June 23.
It is a case that has potential implications for mergers and acquisitions of Indian assets by foreign companies.
The court said it wanted to allow time for changes to tax laws to come into force. The changes were introduced in the last budget and will come into force in the next few months.
"Vodafone continues to believe and has been advised that there is no tax payable on the transaction," the UK mobile operator said.
The Mumbai court had been expected to hold a five-day hearing on the case starting on Tuesday.
Vodafone contests the claim that it should have withheld, on behalf of the government, capital gains tax on its acquisition last year of a controlling stake in Hutchison Essar from Hong Kong conglomerate Hutchison.
Although it was the seller that made the capital gain, the government claims that in this case the buyer is liable.
Among its arguments, Vodafone says that the transfer of shares took place offshore, outside Indian jurisdiction, and there are no laws in India that allow the government to tax such a transaction.
In the takeover deal, a Dutch company owned by Vodafone paid $11bn to a Cayman Island entity owned by Hutchison, for another Cayman Island company that indirectly held a controlling stake in Hutchison Essar, which is based in India.
The government says that because Hutchison Essar's operating assets were based in India, the deal falls within its jurisdiction.
An amendment introduced in the budget, which the government made retroactive, covers liability for withholding tax.
