Vodafone Idea Gets Rs 1,128 Crore Tax Refund | After Bombay High Court Order

Vodafone Idea Gets Rs 1,128 Crore Tax Refund After Bombay High Court Order

Vodafone Idea Gets Rs 1,128 Crore Tax Refund | After Bombay High Court Order

Vodafone Idea, one of the leading telecom operators in India, received a relief from the Bombay High Court on November 9. 

The court ordered the income-tax department to refund Rs 1,128 crore that the company had paid in dues in 2016-17. 

The company’s shares rose 2.5 percent in the early trade following the news.

Why Did Vodafone Idea Pay the Dues?

The dues were related to an assessment order passed by an income tax officer on August 31, 2023. 

The order was issued two years after a dispute resolution panel (DRP) had given directions to Vodafone Idea regarding its tax liability. 

The order claimed that the company had under-reported its income and inflated its expenses in the financial year 2016-17.

Vodafone Idea challenged the order in the Bombay High Court, arguing that it was invalid and time-barred.

The company said that the assessing officer had failed to deliver a final verdict within the stipulated 30-day period after the DRP’s directions. 

The company also said that it had already paid the dues as per the DRP’s directions and that the order was issued without giving it an opportunity to be heard.

What Did the Bombay High Court Say?

The Bombay High Court agreed with Vodafone Idea and quashed the assessment order. 

The court said that the order was “unsustainable and time-barred” and that the income tax department had acted in a “high-handed and arbitrary manner”. 

The court also directed the department to refund Rs 1,128 crore to the company within two weeks along with interest.

The court also recommended an inquiry against the assessing officer for “failure to abide by the legal mandate and the lack of diligence on the part of officials concerned”. 

The court said that the officer had caused a huge loss to the exchequer and the citizens of the country by issuing an erroneous order. 

The court said that strict action should be taken against the persons responsible for the laxity and lethargy displayed.

How Does This Affect Vodafone Idea’s Financial Performance?

The tax refund is a welcome boost for Vodafone Idea, which has been struggling with mounting losses and debts. 

The company recently released its Q2 earnings, where its net loss widened to Rs 8,737.9 crore from Rs 7,595.5 crore in the same quarter last year. 

The company’s revenue also remained flattish at Rs 10,716.3 crore, as compared to Rs 10,614.6 crore in the year-ago period.

However, the company also showed some signs of improvement in its operational metrics. Its EBITDA margin improved 140 basis points year to 40 percent in Q2. 

The blended average revenue per user (ARPU) per month also improved to Rs 142 from Rs 131 in the base period. 

The company also added more 4G subscribers and increased its data usage per subscriber.

The company’s net debt also reduced by Rs 7,220 crore during the last one year and now stood at Rs 2,12,660 crore at the end of Q2. 

The company has been trying to raise funds from various sources to pay its statutory dues and invest in its network expansion. 

The company has also been exploring various options to monetize its assets and optimize its costs.

Conclusion : 

Vodafone Idea has received a favourable verdict from the Bombay High Court, which has ordered the income tax department to refund Rs 1,128 crore to the company. 

The refund will help the company improve its cash flow and reduce its debt burden. 

The company has also shown some positive trends in its operational performance in Q2. 

However, the company still faces many challenges in the highly competitive telecom market and needs to raise more funds to survive and grow.

Content Source Courtesy : 
https://www.moneycontrol.com/news/business/markets/vodafone-idea-up-2-5-as-bombay-high-court-orders-rs-1128-crore-tax-refund-11704541.html/amp

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