Vodafone Idea Ltd won a Rs 833-crore tax refund from the government, as declared by the Supreme Court on July 22, 2020. This came as a consolation for the telecom operator facing government dues of over Rs 50,000 crore.
A division bench of Justices UU Lalit and Vineet Saran denied a special leave petition filed by the tax department against a Bombay high court order, that had instructed the department to refund the amount to Vodafone Idea. The issue was for the 2014-15 assessment year, in which income during the previous financial year is assessed.
On May 28, 2020, the income tax assessing officer issued a rectified order of a net amount of Rs 833 crore to be refunded, after deducting Rs 176.39 crore as pending dues. However, the tax department did not disclose the sum based on the fact that massive dues for other assessment years were yet to be done. Vodafone Idea disputed this in the Bombay high court, which observed refunds cannot be stayed against undetermined future demands.
“The company should get the refund immediately as the top court did not stay the high court order to process the amount in two weeks”, said Prashant Meharchandani, senior associate at PDS Legal. “Since the top court has dismissed the plea, the refund should be given along with the applicable interest for delayed refund as per the (Income Tax) Act,” Meharchandani added.
“With this dismissal of revenue’s (department) SLP (special leave petition) against Bombay HC judgment, revenue will have to process the income tax refund and pay Rs 833 crore to Vodafone Idea, which was earlier denied in anticipation of future tax demands,” said Sumit Mangal, a partner at L&L Partners. “The refund should provide some liquidity to the telco to pay its AGR dues”, Mangal added.
The Supreme Court move presents respite for cash-strapped Vodafone, which is laboring to pay its adjusted gross revenue (AGR) related dues to the department of telecommunications amid a falling subscriber base and dwindling revenues.
