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Informist, Monday, May 18, 2026

 

NEW DELHI – The Supreme Court Monday issued a notice to Vedanta Ltd. on the income tax department's plea alleging that the company had failed to pay tax deducted at source on transactions to foreign company Vedanta Resources Public Ltd. Co. The apex court bench of Justice K.V. Viswanathan and Justice Vijay Bishnoi tagged the income tax department's plea with a related case.

 

The case has its genesis in Vedanta entering into a consultancy agreement and representative office agreement with Vedanta Resources for financial years 2009-10 (Apr-Mar) to FY15. For the services rendered by Vedanta Resources, remuneration was paid by Vedanta without deducting tax at source.

 

Thereafter, the income tax department issued show-cause notices to Vedanta, treating the company as an assessee in default and later passed a final order against the company raising a tax demand. Vedanta said the income tax department's action was time-barred as the final order could not have been passed beyond a period of four years from the end of the relevant financial years.  

 

Vedanta said that the payments made to the foreign entity were in respect of the management services rendered by it. It said its file was with the international taxation circle of the department and it already informed them that tax had not been deducted at source on account of the double taxation avoidance treaty between India and the UK. Vedanta said that during the relevant time, since no limitation period was prescribed in the statute in respect of payments made to non-residents, courts have been holding that the order for not paying tax deducted at source cannot be passed beyond a period of four years.

 

The income tax department said that there have been various amendments to the law related to passing of orders on non payment of tax deducted at source. However, when the orders were passed, the limitation period was seven years with respect to residents and therefore, the reasonable time to pass an order with respect to non-residents cannot be less than this period.

 

When the appeal reached the Madras High Court, it noted that a current amendment has removed the distinction between residents and non-residents and there is a limitation period of six years for the tax department on passing those orders. Noting this, the high court quashed the demand order passed against Vedanta, which was given after six years, and upheld those orders that were passed within this timeline. Challenging the high court's order, the income tax department moved the apex court.

 

At 1342 IST, shares of Vedanta Ltd. were down 1.1% at INR 327.55 on the National Stock Exchange.  End

 

IST, or Indian Standard Time, is five-and-a-half hours ahead of GMT

 

Reported by Surya Tripathi

Edited by Avishek Dutta

 

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