In a major setback to Vodafone, the Supreme Court on Friday refused to intervene in the tax claim case of about $2 bn and asked the telecom firm to present its version before the I-T authorities and respond to the showcause notice.

A bench headed by Justice S B Sinha refused to hear the Vodafone plea that had challenged the Bombay high court judgment, which on December 3 last year had dismissed a petition by Vodafone International Holdings BV, contesting a showcause notice by the I-T department.

Vodafone, Netherlands-based company, had bought a 67 per cent stake in Hutchison Essar from Hutchison Telecom International in February 2007 for $11.2 billion.

The I-T department had asked the telecom major to pay $1.7 billion as capital gains tax for its acquisition of stake in Hutchison Essar (now Vodafone Essar) through a showcause notice on September 19, 2007.

According to Vodafone, it had purchased the entire share capital of non-resident company CGP Investments (Holdings) from HTI (BVI) Holdings, a foreign company having no presence in India.

The entire consideration for the share capital purchase was paid outside India without deducting tax at source, it added.

Vodafone had moved the Bombay high court alleging that the I-T Department had no jurisdiction over a deal between two parties incorporated overseas.