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Informist, Monday, Aug. 24, 2026

 

--HC directs tax dept to refund INR 531 mln to Vodafone Idea by Sept 30 

--CONTEXT: Vodafone Idea said that refund was pending for 2 yrs 

 

NEW DELHI – The Delhi High Court has ordered the Income Tax Department to refund INR 530.96 million to Vodafone Idea Ltd., along with interest for assessment years 2003-04 (Apr-Mar) and 2008-09 to 2013-14, by Sept. 30, pulling up the department for not paying the amount for two years. In case the amount is not credited in Vodafone Idea's account by the due date, the entire amount shall carry an interest of 1% per month over and above the statutory interest, the court said.

 

The case portrays a "grim picture" of the state of affairs in the Income Tax Department on issues relating to refunds, the court said. The amount relating to Vodafone Idea is still lying with the department after 10 years of legal battle, which it had won before the Income Tax Appellate Tribunal in June 2024, the court said. The petitioner's plight does not end here, it said. After having won the legal battle before the appellate tribunal, though the assessing officer found an amount of INR 530.96 million refundable to Vodafone Idea in October 2024 and May 2026, the department has still not remitted the amount.

 

Unless an order to adjust a current tax refund against pending tax dues from the past years is passed, the assessing officer cannot withhold any amount of the assessee once the appellate authority finds an amount to be refundable after passing of an order under Section 201 of the Income Tax Act, 1961, or pursuant to an appeal arising therefrom, said a bench comprising Justice Dinesh Mehta and Justice Rajneesh Kumar Gupta. In this case, the tax department has failed to show any order passed by the competent authority withholding or adjusting any refund, the bench said.

 

"Such being the position, the plea taken by the respondents (Income Tax Department) that the refund has not been issued because of the pending outstanding demand qua petitioner's PAN (permanent account number) and sister TANs (Tax Deduction and Collection Account Numbers) is clearly untenable in law, arbitrary, and violative of Articles 14, 19(1)(g) & 300A of the Constitution of India," the court said. Once an assessing officer makes an assessment and the appellate authority passes an order on a refund, it is a vested and crystallised right of an assessee to get the refund, along with applicable interest, the court said. However, this is subject to the department's right to challenge such a refund order in accordance with law, the court added.

 

"We hold it very categorically that once an assessment under Section 201 of the Act of 1961 has been made, neither Rule 31A of the Rules of 1962 applies nor can the AO (assessing officer) or the CPC (Centralised Processing Centre) compel any assessee to furnish Form 26B and therefore, the amount found refundable after giving effect to the appellate authority's order has to be paid along with applicable interest, subject of course to withholding or adjustment by way of legally passed order under Section 245 of the Act of 1961," said the bench. "It is a fit case for imposition of exemplary cost, but we make the case easy," it added.

 

Vodafone Idea said that when it received favourable orders from the appellate tribunal and the assessing officer for refund, the tax department insisted upon filing of Form 26B, an acknowledgement receipt when a tax deductor or payer raises an online request to claim a refund for excess tax deducted at source, for a refund of the amount. Vodafone Idea said it was of the view that Form 26B cannot be insisted upon as different high courts have held that it is not necessary. However, the company still submitted the form to expedite the process of refund, it said.

 

When the petitioner filed the form, the tax department rejected it, saying there are certain dues with respect to Vodafone Idea's permanent account number and sister Tax Deduction and Collection Account Numbers to the tune of INR 9.25 billion, whereas most of such demands had been stayed by the competent authorities. According to the department, more than INR 100 million remains outstanding against the petitioner, Vodafone Idea; contesting this, the company said only INR 2.8 million remains pending.

 

Vodafone Idea said the company was in dire need of cash because of the capital-intensive nature of its business. It is because of the approach of the tax department that a huge amount which the petitioner has deducted is lying with the respondents and, in spite of various orders by the authorities, it is not getting a refund, the company said.

 

The department had said that since there was an outstanding demand of more than INR 100 million, it was justified in not issuing a refund to Vodafone Idea. It said it has been the consistent practice of the department and all assessing authorities throughout the country that whenever a refund of tax deducted at source is given even in furtherance of the orders of a court or an appellate authority, an assessee is asked to furnish Form 26B, the respondent further said.

 

Monday, shares of Vodafone Idea ended at INR 14.07 on the National Stock Exchange, up 0.9% from Friday.  End

 

Reported by Surya Tripathi

Edited by Himanshi Gupta

 

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