The Supreme Court provided a big relief to Vodafone Idea by ordering a tax refund of Rs 1,128 crore. This amount relates to excess prepaid taxes paid by the telecom company. The court upheld Vodafone Idea’s claim, stating that the government must refund the excess tax amount. This decision comes as a boost for the financially struggling telecom giant.
New Delhi: The Supreme Court upheld a Bombay High Court ruling on Monday that ordered the income tax authorities to refund an excess prepaid tax amounting to Rs 1,128 crore to the telecom company.
The Bombay High Court had previously issued its decision in November 2023, instructing the income tax department to return the surplus prepaid tax for the assessment year 2016-17.
This ruling stemmed from a petition submitted by Vodafone Idea Limited, which contended that the income tax department had failed to refund an amount that exceeded its legitimate tax obligations for that fiscal year. For the assessment year 2016-17, Vodafone reported a loss of approximately Rs 5,042 crore.
Vodafone had requested a total refund of around Rs 1,600 crore, which included taxes and interest, composed of tax deducted at source and advance tax payments.
A bench led by Justice JB Pardiwala dismissed the income tax department’s appeal against the Bombay High Court’s ruling, which deemed the assessment order against Vodafone as “unsustainable and time-barred.”
The Supreme Court noted,
“There is a gross delay of 295 days in filing the SLP which has not been satisfactorily explained by the petitioners (department).”
In August 2018, Vodafone India, the Indian subsidiary of the UK’s Vodafone Group PLC, merged with Aditya Birla Group’s Idea Cellular.
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This Supreme Court ruling coincides with reports indicating that the government is contemplating a proposal to waive 50% of interest and 100% of penalties related to the adjusted gross revenue (AGR) dues for telecom companies, including Vodafone Idea and Bharti Airtel.
This proposal should be implemented, it could offer substantial financial relief to Vodafone Idea, which is currently grappling with significant debt and a declining subscriber base.
Vodafone Idea Limited, also known as Vi, is one of India’s largest telecommunications companies. It was formed in August 2018 through the merger of Vodafone India and Idea Cellular. The merger aimed to consolidate their operations and compete more effectively in the highly competitive Indian telecom market.