Now, the next legal battle between Vodafone International and the Income Tax (I-T) department will be fought in the Supreme Court. Both are fighting this legal battle over a tax case of $2 billion. Vodafone Plc's had purchased a 67% controlling stake in Hutchison Essar from Hutchison Telecom International (HTIL) last year but not paid tax that conform to Indian IT laws.

Vodafone and the I-T department pleaded before the division bench of Justice S Radhakrishnan and Justice AV Nirgude on Wednesday. The decision is likely to come after July 18. The final hearing in the case had started on June 23. Additional Solicitor-General Mohan Parashar and counsel Beni Chatterjee represented income tax department in court and has sought a copy of the agreement between Hutchison and Vodafone in the court. Counsel Iqbal Chagla has represented Vodafone in the Bombay high court.

He pleaded that I-T act do not apply to non-residents of India. Vodafone international is Netherland based company, operating in India and some other countries of the world.

Mobile operator Vodafone has paid $11.1 billion to Hong Kong based Hutchison Whampoa for controlling stakes in the company last year. Indian tax department is seeking$2 billion in tax from Vodafone.

The company is liable to pay capital gains tax as most of the assets it bought are based in India. Vodafone, on the other hand pleaded that capital gains tax is usually paid by the seller, not the buyer.

The mobile operator has also challenged the constitutionality of change in tax law in the month of May. The Indian IT department has changed its rules in May allowing government to take actions against such companies, which do not withhold taxes during a transaction.