SC tells Govt to refund ₹833 crore  to Vodafone-Idea

Vodafone Idea Ltd on Wednesday secured a Supreme Court victory in its pursuit of a Rs 833-crore tax refund, in some relief for the telecom operator struggling to pay government dues of over Rs 50,000 crore.

A division bench of Justice UU Lalit and Justice Vineet Saran rejected a special leave petition filed by the tax department against a recent Bombay high court order, which had asked the department to refund the amount to Vodafone Idea. The refund is for the 2014-15 assessment year, in which income earned in the previous fiscal year is assessed.

On May 28, the income tax assessing officer passed a rectified order for a net refund of Rs 833 crore, after deducting Rs 176.39 crore as pending dues. However, the tax department did not release the amount on the ground that massive dues for other assessment years were pending. Vodafone Idea challenged this in the Bombay high court, which said refunds cannot be withheld 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 comes as a big relief for cash-strapped Vodafone, which is struggling to pay its adjusted gross revenue (AGR) related dues to the department of telecommunications amid a declining subscriber base and shrinking revenues.

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