The Vodafone Group now has one more front to defend as it filed a petition in the Supreme Court to safeguard itself from more penalties from the local taxman on its Indian unit Vodafone Essar.

The tax department on March 23 sought to penalise Vodafone International, the holding company of Vodafone Essar, for failure to present Cayman Island income tax returns and certain other documents. The IT department had asked for these documents between January and October 2009.

In January 2009 the Supreme Court rejected a writ petition by Vodafone challenging the original notice from the IT department. The court referred the case back to the Bombay High Court while asking the IT department to decide if had jurisdiction to tax the transaction in which Hongkong-based Hutchision sold its Indian telecom unit to Vodafone in 2007. The Bombay HC started hearing the case from Ocrober 2009 and ruled against Vodafone in September last year. The company has appealed this decision to the Supreme Court.

The tax department already has a pending case against the Vodafone Group seeking up to Rs 11,000 crore. The Indian tax department says Vodafone should have withhold capital gains tax from Hutchison in 2007, when the UK-based telecom operator bought 67% voting rights in Vodafone Essar for $11 billion. Vodafone bought the stake through Cayman Islands-based CPG, a unit of Hutchison Telecommunications International.

Vodafone has submitted a deposit of Rs 2,500 crore and also provided a bank guarantee worth Rs 8,500 crore with a state-run bank.

Vodafone filed a petition on Monday to block the tax department's latest penalty saying, "It is difficult to understand the rationale behind the tax authorities seeking to impose penalties on a matter which the tax authorities have themselves described as a 'test case'."

The case will be heard at the Supreme Court on Thursday. "If tax is due, it could be as high as 100% of the original tax liability; but we are challenging that any of it is due," said Vodafone group spokesman Simon Gordon.

The Supreme Court is likely to hear the original Vodafone Tax case on July 19. The Bombay High Court already ruled that the taxman has jurisdiction at least on part of the transaction if not all of it. Vodafone has challenged the decision.

The latest penalty proceedings are "likely to raise further concerns amongst potential investors into India ," Vodafone said in an e-mailed statement.

"All the advice received by Vodafone during, and since, the acquisition is that there is no tax, or therefore penalty, that arises and Vodafone will take all appropriate steps to defend itself and its investors against this latest unwarranted action from the tax authority," the statement said.

ET