Delhi HC rejects Vodafone ’s Plea to Process Refund Claim of Rs. 4759.74 Crores [Read Judgment]


A two-judge bench of the Delhi High Court has dismissed a petition filed by M/s Vodafone Mobile Services Ltd seeking expeditious processing of their refund claims worth 4759.74 Crores.

Before the High Court, the Company sought for a direction to the income tax department to expeditiously process the refund claim made by them and issue the refund in respect of its income tax returns for the relevant period under consideration, together with eligible interest.

The Company, engaged in providing telecommunication services. There were a total of seven group entities providing telecom services in different circles. Later, four Vodafone group entities (HVDL, VEL, VSL, and VCL) amalgamated with Vodafone under the first scheme of amalgamation w.e.f. 01.04.2011. Further, the second scheme of amalgamation, two other groups (VSPL and VWL) amalgamated with Vodafone w.e.f. 01.04.2012. The Revenue was duly intimated about the two schemes of amalgamation. As a consequence, all proceedings in the case of the amalgamating entities are to be carried on in the name of Vodafone.

The Company claimed refunds for the periods 2014-15 to 2017-18. Parallelly, the department approached the Court for a permission to process the returns filed by the Company and adjust the refunds to the extent of the stayed outstanding tax demand.

The Company submitted before the Court that it was under financial stress and no recoverable demands are foreseeable, thus there was no ground for delaying the processing of the returns and issuance of the consequent refunds.

The department took a view that considering pending special audit, pending scrutiny, opening demands of amount more than 4500 crores, it will be prejudicial to the interest of the revenue to process the returns without completion of the pending scrutiny cases.

Dismissing the petition, Justice Ravindra Bhatt and Justice Prateek Jalan held that “There is some merit in the Revenue’s argument that substantial outstanding demand is pending against the petitioner. Further, the likelihood of substantial demands upon the assessee after the scrutiny for the AYs is completed, cannot be ruled out. The Revenue should have the right to adjust the demands against the refunds that may arise but have not yet been determined due to ongoing scrutiny proceedings.”

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