KHARKIV, Ukraine (Reuters) - A Ukrainian court resumed a tax evasion case on Tuesday against jailed ex-prime minister Yulia Tymoshenko, but then postponed the hearing for two weeks after a wrangle over whether she could take part in proceedings by video-link from her hospital bed.
Tymoshenko is already serving a seven-year sentence for alleged abuse of office but has been moved from prison in the eastern city of Kharkiv to a clinic for treatment for a chronic back condition.
The new hearing in Kharkiv on charges of tax evasion and embezzlement has already been put off several times since a formal opening in mid-April because her treatment ruled out her attendance.
More than a 1,000 supporters and opponents of Tymoshenko, whose prosecution and jailing has soured relations between the former Soviet republic and the European Union, gathered outside the courtroom in Kharkiv when the case resumed.
But judge Kostyantyn Sadovsky ordered another postponement until August 14 after Tymoshenko's counsel refused a submission by the prosecution that she could take part in proceedings by video-link from hospital.
"I declare that I do not agree to take part in a video-conference," Tymoshenko said in a personal statement read to the court by her lawyer, Serhiy Vlasenko.
The break might allow the issue to be clarified, Sadovsky said.
When the trial resumed on Tuesday, Tymoshenko was again absent. German doctors who have been treating her said on Monday that her physical condition required up to eight more weeks of attention.
In the new case Tymoshenko, 51, denies the tax evasion and embezzlement charges, which go back to the 1990s when she was a prominent businesswoman.
Prosecutors say Tymoshenko's now-defunct gas trading company caused losses to the state equivalent to about $4 million, while she personally evaded paying $85,000 in taxes.
Tymoshenko, President Viktor Yanukovich's main political opponent, was jailed for alleged abuse of office as prime minister relating to a gas deal which she brokered with Russia.
The government says the 2009 deal saddled Ukraine with an unfair price for gas imports which has hamstrung the economy.
She says she is the victim of a vendetta by Yanukovich who defeated her in a fight for the presidency in February 2010.
The EU, which says her prosecution smacks of selective justice, has shelved landmark deals on free trade and political association in response to Tymoshenko's conviction last year.
Tymoshenko was a leader of the 2004 Orange Revolution protests that derailed Yanukovich's first bid for the presidency and has since been prime minister twice.
Since losing the 2010 presidential election to Yanukovich in a close run-off, Tymoshenko and a number of her opposition allies have faced corruption-related charges which Tymoshenko has dismissed as political vengeance.
Even though her controversial imprisonment bars her from running for election, Tymoshenko symbolically heads a candidate list put forward by an opposition coalition for a parliamentary election in October.
Her opponents outside the courtroom on Tuesday carried posters denouncing her with slogans such as "Keep her in prison! She is a thief!". Supporters of Tymoshenko and her Batkivshchyna (Fatherland) party wore T-shirts bearing her peasant-braided portrait and chanted "Yulia - Freedom!".
(Reporting by Andriy Perun; Writing By Richard Balmforth; Editing by Angus MacSwan)