Vodafone-Idea gets favourable order against Income Tax Dept

Vodafone Idea should get the refund immediately as the top court did not stay the Bombay High Court order directing to process the amount within two weeks.

The Supreme Court on Wednesday dismissed a petition filed by the income tax department challenging Bombay High Court’s order to refund Rs 833 crore to Vodafone Idea Ltd.

The Bombay High Court in June had ordered the tax department to refund the said amount to the telco for the 2014-15 assessment year.

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The income tax assessing officer had passed a rectified refund order on 28 May after deducting ₹176.39 crore as pending dues and settling at ₹833 crore as net refund to Vodafone Idea.

However, the income tax department withheld the refund claiming that massive outstanding dues for other assessment years were pending. This was challenged by Vodafone Idea at the Bombay High Court, which said refunds cannot be withheld against undetermined future demands.

The Supreme Court move comes as a relief for cash-strapped Vodafone Idea that is struggling to pay its adjusted gross revenue (AGR) related dues to the department of telecommunications (DoT) amid declining subscribers base and shrinking revenues.

The DoT estimated Vodafone Idea’s AGR dues at ₹58,254 crore, of which the telco has so far paid ₹7,854 crore. The operator still owes ₹50,400 crore to the government. The Centre has agreed to give a time period of 15-20 years. The Judgment is reserved by the Apex Court.

After completing their merger in August 2018, Vodafone Idea had become India’s largest telecom company with 408 million active subscribers. However, the telco’s active subscriber base has fallen significantly to 294 million as of March 2020, with a market share of 27.57%, behind Bharti Airtel’s Ltd 28.31% and leader Reliance Jio Infocomm Ltd’s 33.47% share.

Vodafone Idea should get the refund immediately as the top court did not stay the Bombay High Court order directing to process the amount within 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,” he added. 

On July 23, the stock closed at Rs 8.60 on the NSE.