Bombay High Court Orders Rs 1128 Cr Tax Refund to Vodafone Idea, Criticizes Income Tax Department

Bombay High Court's Stance on Vodafone Idea Tax Refund

In a recent legal victory for Vodafone Idea Limited, the Bombay High Court has ruled that the company is entitled to a substantial tax refund. The court mandated the Income Tax Department to return Rs 1,128 crore to the telecom giant for taxes paid in excess for the assessment year 2016-2017. This judgement came after Vodafone Idea filed a petition arguing that the tax paid exceeded the genuine amount due.

Court Highlights Inefficiency in Income Tax Department

The court's decision highlighted inefficiencies within the Income Tax Department, citing a 'time barred' assessment order that could not be upheld. Not only did the department fail to refund the excess tax, but it also did not adhere to the stipulated 30-day timeframe for finalizing the order, an oversight the High Court strongly criticized. A division bench, consisting of Justices K R Shriram and Neela Gokhale, remarked on the inaction of the assessing officer, characterizing it as "laxity and lethargy" that ultimately harmed the public interest and the national exchequer.

Underpinning the ruling was the court's perception that the case was straightforward. The neglectful approach taken by the assessing officer in fulfilling the duties according to the Income Tax Act was met with disapproval. The court emphasized that failures in upholding legal duties could severely impact economic stability and the nation's prosperity. The High Court underscored the significance of a robust, efficient, and transparent tax administration for the welfare of the country.

Actions Recommended by the Court

Consequent to the judgement, the Bombay High Court recommended the initiation of an in-depth enquiry into the assessing officer's failure to comply with the Income Tax Act. The court demanded strict action against those accountable for the oversight that resulted in financial loss. They instructed that copies of the order be disseminated to the Union Ministry of Finance.

Vodafone Idea's struggle for its tax refund commenced with a draft order in December 2019, followed by its objections in January 2020. After the Dispute Resolution Panel issued its directives in March 2021, the company awaited the final decision. However, the observing officer's response came only in August 2023, which was rejected by the court as being 'time-barred.'

The tax department's attempt to cite the 'Faceless Assessment Regime' as a reason for the delay was swiftly dismissed by the court, asserting that the directions from the DRP were clearly accessible on the ITBA portal. Moreover, the assessing officer's sudden activity upon becoming aware of the company's petition further fueled the court's criticism.

In conclusion, the High Court decreed that Vodafone Idea was entitled to the refund, inclusive of interest, stressing the tardiness of the final assessment order.

Vodafone Group Plc VOD, with headquarters in Newbury, United Kingdom, is a leading international telecommunications service provider with a substantial presence in Europe and beyond.

refund, tax, Vodafone