Vodafone Idea breathes relief, SC orders IT Department to return Rs 833 Crores
By MYBRANDBOOK
Telecom giant Vodafone Idea (VIL) breathed a sigh of relief when the Supreme Court directed the IT department to refund Rs 833 crore thus giving some relief to the cash strapped Telco burdened fewer than thousands of crores of statutory dues and boosting its shares.
"We do not see any reason to interfere in the matter. The special leave petition is, accordingly, dismissed. Pending application(s), if any, also stand disposed of," the apex court bench comprising Justices U U Lalit and Vineet Saran ruled.
The IT department had contested a July 3 order of the Bombay High Court which had asked the authorities to refund Rs 833 crore to VIL for assessment year (AY) 2014-2015.
Shares of Vodafone Idea closed about 2.7% higher at Rs 8.53 on the BSE on Wednesday. The apex court's order is part of a larger tax dispute between the Telco and the Income Tax department amounting to Rs 4,759 crore and may help the operator to meet its working capital or capex needs, even as it needs to repay around Rs 50,400 crore of adjusted gross revenue dues, say experts.
This is the second such refund that the telco will get and it comes at a time when the telco has told SC in the AGR case that it faces a severe cash crunch with its net worth totally eroded. On April 29, the top court had directed the tax department to refund Rs 733 crore.
The genesis of this battle can be traced to when the telco sought a refund of Rs 4,759 crore for assessment years (AY) 2014-15 to 2017-18. The IT department had withheld the amount, claiming that outstanding dues were yet to be settled by the telco. The top court mentioned that the department cannot withhold refunds against undetermined future demands.
The telco has been involved in various tax-related disputes with the I-T department, including the Rs 20,000-crore withholding tax dispute related to its Hutchison stake buy in 2007, which is currently under international arbitration. The company was then known as Vodafone Mobile Services Ltd.
VIL, born out of merger of Vodafone India and Idea Cellular in August 2018, has an uphill task of survival. On Monday, it requested the top court to allow it to pay the AGR dues over a 15-year time frame. It has previously said that it will shut shop if forced to pay the dues upfront.
Analysts estimate that even if its 15-year wish is granted, the telco is estimated to face an annual outflow in the Rs 5,900-6,253 crore range, depending on 8% or 9% interest rate.
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