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NEW DELHI -(Dow Jones)- India's top court will deliver Friday its much- anticipated judgment on the jurisdiction of local authorities to tax Vodafone Group PLC's (VOD.LN) 2007 purchase of a majority stake in mobile operator Hutchison Essar Ltd., a notice on the court's website showed.

A three-judge bench, chaired by Chief Justice S.H. Kapadia, will give the judgment likely around 0745 GMT (1315 local time), the notice showed.

Overseas companies with investments in India are closely watching the case, and the ruling is expected to provide clarity on tax rules for foreign investors who consider the South Asian nation a potential business destination, especially when most developed economies are slowing.

Vodafone has approached the Supreme Court after a lower court ruled the local authorities have the right to seek tax on the deal that the world's biggest mobile network operator by sales claims was a transaction between two foreign entities--a Vodafone company in the Netherlands and a Cayman Islands-based unit of Hutchison Whampoa Ltd. (0013.HK)--and therefore can't be taxed in India.

According to Vodafone, even if tax were due in India, it is the seller, Hutchison, and not the buyer, who should pay it.

According to the tax authorities, the $11.2 billion deal was for an asset in India and Vodafone should have withheld tax on Hutchison's capital gains and paid it to the government.

India's tax body had charged $2.5 billion in capital gains tax and interest on the transaction.

Vodafone had also appealed slapping of a penalty for non-payment of the tax which it said could amount to 100% of the taxable amount, taking the company's potential liability to $5 billion.

Following a previous order, Vodafone has made a refundable deposit of INR25 billion with the Supreme Court and provided a bank guarantee for INR85 billion with a state-run bank, covering the tax amount the local tax body has claimed.

India contributed GBP2.18 billion, or around 9%, of Vodafone's revenue of GBP23.52 billion for the six months to Sept. 30. Of the group's 391 million mobile customers, more than 145 million are in India.

-By R. Jai Krishna, Dow Jones Newswires; +91-11-4356 3333; krishna.jai@ dowjones.com

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