Delhi HC Orders I-T Department To Pay ₹53 Cr Refund To Vodafone Idea

The Delhi High Court has pulled up the Income Tax Department over what it called a "grim picture" of how tax refunds are being handled, while directing the department to release ₹53.09 crore to Vodafone Idea along with applicable interest, as per Live Law.

A division bench of Justice Dinesh Mehta and Justice Rajneesh Kumar Gupta, in an order dated August 18, asked the department to pay the amount to Vodafone Idea by September 30, 2026. The court warned that if the payment was delayed beyond this date, the company would be entitled to an additional 1% monthly interest over and above the statutory interest already applicable.

The dispute relates to tax refunds for assessment year 2003-04 and the period from 2008-09 to 2013-14. Vodafone Idea had won relief before the Income Tax Appellate Tribunal through a series of orders passed between April 2024 and February 2025. Acting on these orders, the Assessing Officer later confirmed a total refund of ₹53.09 crore.

Despite this, the amount remained unpaid. The court noted that the company had been in litigation for nearly a decade and that even after the Assessing Officer quantified the refund in October 2024 and again in May 2026, no payment had been made.

The tax department had asked Vodafone Idea to submit Form 26B, used for claiming refunds of excess TDS, before processing the payment. The company submitted the form for two assessment years, but its applications were rejected on the grounds of outstanding demands linked to its PAN and the TANs of related group entities.

The department told the court that outstanding demands stood at around ₹924.57 crore. It, however, admitted that ₹913.66 crore of this had already been stayed by various authorities and courts. Vodafone Idea contested the remaining amount as well.

The bench held that once an assessment under Section 201 is completed, or an appellate order results in a refund, the amount becomes a "vested and crystallised right" of the taxpayer, along with interest. It said the Assessing Officer or the Centralised Processing Centre could not insist on Form 26B before releasing a refund arising from such orders.

The court further ruled that the department could withhold or adjust a refund only through a formal order passed under Section 245. In the absence of such an order, it said, an outstanding demand against the assessee or a sister concern's TAN alone could not be used to justify withholding the refund.