Voda-Idea presses for Rs 7,000-cr tax refund; I-T hesitant in view of AGR

Vodafone Idea, India's third-largest telecom service provider, is seeking about Rs 7,000 crore in tax refunds for past years even as it faces fresh statutory dues liability - running into thousands of crore - that has put the income tax department in a bind, sources privy to the development said.

The tax department has in past adjusted refunds against a company's other liabilities towards the government. It had famously adjusted Rs 1,500 crore in tax refunds due to Cairn Energy plc of UK to part settle a retrospective tax demand of Rs 10,247 crore even though the matter was under arbitration.

Sources said Vodafone has to receive an aggregate of about Rs 1,000 crore from Mumbai unit of income tax department and another Rs 6,000 crore from its Delhi office for multiple assessment years dating back to 2004-05.

The company has got favourable rulings from High Courts and appellate tribunals in some and is now pressing the department to quickly refund the dues, they said.

The income tax department is, however, caught in a bind as Vodafone-Idea Ltd has to pay Rs 44,150 crore to the government in past statutory dues following the Supreme Court ruling that non-telecom revenues have to be included for calculating the payout towards license fee and spectrum usage charge.

Sources said the department is of the view that the refund should be adjusted against this demand as there have been some concerns raised in a section of media about the very existence of the company if it were asked to cough up the past statutory liabilities.

The department wants the Finance Ministry in consultation with the Telecom Ministry to decide on dealing with the refund.

Vodafone Idea declined to comment on an email sent to the company on the matter.

Vodafone Idea, last week, reported a consolidated loss of Rs 50,921 crore -- the highest ever loss posted by any Indian corporate -- for September quarter on account of liability arising out of the Supreme Court's order in the adjusted gross revenue (AGR) case.

The Supreme Court ruled in favour of the government and directed telecom companies, including Vodafone Idea, to pay dues as demanded by the Department of Telecom. Vodafone Idea has said that its ability to continue business will depend on reliefs sought from the government and positive outcome of the legal option it has (the company is in the process of filing a review petition on the AGR matter).

Both Vodafone India and Idea Cellular merged their telecom business to handle the tariff war in the sector, triggered by the new entrant Reliance Jio in 2016. The merged entity Vodafone Idea came into existence on August 31 last year as the biggest telecom operator in the country with 408 million mobile customers.

However, the financial woes for the company did not end and the company lost over 100 million mobile subscribers since merger due to the cut throat tariff war, and chasing higher revenue-yielding minimum recharges.

The company has been investing in building networks. However, low return from tariffs added to its financial worries.

The older telecom operators -- Vodafone Idea and Bharti Airtel -- are staring at massive financial outgo in unpaid statutory dues as Supreme Court has upheld government's way of calculating the telecom revenue, on which licence fee and spectrum charges are computed.

As per latest estimates by the telecom department, Bharti Airtel faces a liability of around Rs 62,187 crore (including share of Tata Group of companies and Telenor India), while Vodafone Idea may have to pay about Rs 54,184 crore. The remaining liability is with state-owned BSNL/MTNL and some of the shut/bankrupt telecom companies.

The Supreme Court has allowed three months to the affected telcos to cough up the amounts due to the DoT, and recently the telecom department shot-off notice to telcos to pay their revenue share dues within the timelines stipulated by the court. The department has given option to operators to clear all the dues on self-assessment basis.