Vodafone Idea Gets Limited Relief From Supreme Court In Tax Case

The Supreme Court has directed the revenue department to release Rs 733 crore in tax refunds to Vodafone Idea Ltd. The telecom major had however moved court for release of tax refunds worth Rs 4,759 crore.

The dispute relates to assessment years 2014-15 to 2017-18.

The department had withheld the refunds on grounds that the company’s income tax returns raised multiple issues like transfer pricing adjustment, capitalisation of licence fees, 3G spectrum fees, among others, which required thorough scrutiny and determination. It had argued that processing any refunds, in light of pending special audit, scrutiny and tax demands of more than Rs 4,500 crore, will be prejudicial to the interest of the revenue department.

On the other hand, Vodafone Idea had relied on previous Supreme Court decisions and tax law provisions to say all refunds have to be processed within one year unless it’s detrimental to the department’s interests. Since no correspondence from the revenue department was received in this time period, the company has the right to claim refund.

But the apex court noted that the tax department had followed the statutory requirements in issuing notices to Vodafone. It also pointed out only for assesment year 2015-16, the assessment order was final and reflected a refund of Rs 733 crore. For assesment years 2016-17 and 2017-18, the department hadn’t even initiated requisite action.

And so, it directed the department to refund Rs 733 crore to Vodafone Idea within four weeks, and to expeditiously conclude the proceedings for 2016-17 and 2017-18.