Refund ₹833 crore to Vodafone Idea, HC tells I-T department

In a major reprieve for Vodafone Idea Limited, the Bombay high court (HC) on Friday directed the income tax (I-T) department to refund ₹833 crore to the telecom

In a major reprieve for Vodafone Idea Limited, the Bombay high court (HC) on Friday directed the income tax (I-T) department to refund ₹833 crore to the telecom major in two weeks.

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Vodafone Idea had filed a petition seeking a direction to the I-T department to refund ₹1,009.43 crore as quantified by the department’s order dated May 28, 2020. By way of interim order, the company had sought immediate refund of ₹833 crore, an undisputed refund quantified under the department’s rectification order of May 28 itself.

According to its petition, the telecom major had filed returns in September 2014, which was revised in March 2016 and further revised on February 2017. On October 31, 2019, an assistant commissioner of I-T department passed an assessment order determining the refund of ₹733.80 crore to the company. Vodafone Idea, however, sought rectification of the assessment leading to a litigation, which was finally decided by the apex court on April 29, 2020.

Pursuant to the Supreme Court order, the department passed fresh orders on May 28 declaring that the company was entitled to refund of ₹1,009.43 crore for assessment year 2014-15. The assessing officer, however, deducted amount of ₹176.39 crore towards demand for several other years that was pending against the company, thus fixing the net refund at ₹833 crore.

On June 11, the company wrote to the principal commissioner of I-T department and sought refund of ₹1,009.43 crore, as determined under the order dated May 28, and later also sent reminders. The firm then moved the high court as it did not get any response and contended that the department was bound to release the refund amount as there is no provision under the I-T Act permitting withholding of the said admitted amount once orders are passed determining the refund.

I-T department responded to the petition contending that withholding the refund was justified since huge outstanding demand has been pending against the petitioner. It was also submitted on behalf of the department that section 241A of the I-T Act empowers the department to withhold the refund.

The bench of justice RD Dhanuka and justice Madhav Jamdar, however, refused to accept the argument and said the department’s May 28 order has attained finality. It added that the only remaining issue was whether the assessing officer could have adjusted the amount of ₹176.39 crore from the refund or not.

The judges added that the issue can be decided later by the court, but as regards the balance amount of ₹833 crore all proceedings have now culminated and the department cannot withhold the refund on the grounds that they may have a future demand against Vodafone Idea arising out of the pending assessment orders. The bench further said I-T officials had no power to withhold refund against undetermined future demands.