Vodafone Group Plc’s subsidiary, Vodafone International Holdings BV filed an appeal in the Bombay High Court on Monday against the notice sent by the Income Tax (I-T) Department asking it to pay over $ 2 billion tax on its acquisition of Hutchison stake for $ 11.1 billion carried out in February 2007.

"it is important to note that this is not a demand for payment,” said Vodafone in a statement saying that I-T Dept only suggested the payment.

Vodafone's contention has been that it is not liable to be taxed in India because its deal to buy a 67 per cent stake in Hutchison Essar from Cayman Islands-registered CPG took place on foreign soil. The tax department's case has been that Hutchison made capital gains in the deal, and while paying the amount to Hutchison, Vodafone should have deducted tax on it.