Vodafone Idea AGR Case

Name of Case:  VODAFONE IDEA LTD VS. ASSISTANT COMMISSIONER OF INCOME TAX CIRCLE 26 (2) & ANR.)
Citation: CIVIL APPEAL NO. 2377 OF 2020 (@ SLP (C) NO.1169 OF 2019)
Year of the Case: 2019
Appellant: VODAFONE IDEA LTD 
Respondent: ASSISTANT COMMISSIONER OF INCOME TAX CIRCLE 26 (2) & ANR.)
Bench/Judges : JUSTICE ARUN MISHRA JUSTICE S. ABDUL NAZEER JUSTICE M.R. SHAH

Greater part telecom stocks saw selling predisposition on Tuesday after the Supreme Court saved its decision over the recuperation of balanced gross income (AGR) from the bankrupt telcos. Presently in the most recent turn of events, it is being realized that the telecom body COAI has moved toward money service looking for administration charge waiver on AGR levy.

To this Court, apparently the net impact of Tata Teleservices (supra) is that the income cannot be dormant, in situations where the assessee claims discount, and the one-year time frame is finished (under stipulation to Section 143(1) closes. The Assessing Officer needs to apply his psyche to consider whether the realities and conditions of the case, warrant a few or the entirety of the discount of the assessee’s sums, or if everything of it requires to be retained, at whatever point the assessee presses for discount. This activity ought to be embraced instantly, remembering as far as possible under the typical arrangement of Section 143(1) terminates. This Court held in Tata Teleservices Ltd. (supra) and the Bombay High Court in the event of Group M Media India (P) Ltd. (supra) that it would be entirely discriminatory for the Assessing Officer to simply sit over the solicitor’s solicitation for discount referring to the accessibility of time up to the last date of surrounding the evaluation under Section 143 (3). The correct understanding of the rule and the circumstance in such a case would be, the Assessing Officer should take up a speedy removal of the inquiry once the assessee demands for arrival of the discount.

Facts

For this situation, the income has depended on a request dated 28.07.2018, which bury alia, expressed that “thinking about pending exceptional review, pending investigation, opening requests of sum in excess of 4500 crore, it will be biased to the enthusiasm of the income to handle the profits without finishing of the pending examination cases. Thusly, practicing powers under Section 143(1) and under Section 241A of the Act, the undersigned decay the handling of profits under Section 143(1).” The senior advice for Vodafone had assaulted the dependence on this request, expressing that it was made later. In any case, that is a perspective this Court cannot go into. Facially, the request contains reasons. Hence, dissimilar to Tata Teleservices, a contemplated request was settled on; that choice depended on a round, which shackled the Assessing Officer’s prudence. Along these lines, the CBDT round was saved.

Actuality

The Center had referred to unfriendly effect on the economy, telecom part and banking divisions. The telecom organizations’ all out balanced gross income contribution is an amazing Rs 1.47 lakh crore.

Issues

On March 16, Mehta, showing up for the DoT, had looked for stunned installment more than 20 years of AGR duty by telecom organizations. Airtel had just paid Rs 13,000 crore as AGR contribution up until this point, and Vodafone Idea has paid Rs 3,500 crore, IANS revealed.

a) By blend which became effective on 01.04.2011, four gathering elements: Vodafone Cellular Ltd., Vodafone Digi link Ltd., Vodafone East Ltd. also, Vodafone South Ltd. got converged in VMSL.

b) By second plan of blend, two other gathering elements: Vodafone Spacetel Ltd. what is more, Vodafone West Ltd. got converged in VMSL w.e.f. 01.04.2012.

c) While the procedures in the moment case were pending, by plan of arrangement2 among VMSL and Idea Cellular Ltd. Vodafone Idea Ltd. – the resultant organization accepted all the rights and liabilities of the amalgamating/transferor organizations.

Judgment Perceptions

 We are confirming if Insolvency and Bankruptcy Code (IBC) procedures are deception to avoid satisfying AGR obligations. Will an advantage (range) that does not have a place with telecom organizations be sold under IBC?

 Government should move to drop permit, range if contribution is being cleared out. If telcos are reluctant to pay, we will coordinate drop of range allotment. By what other means is DoT expected to manage such an issue?

 How would you be able to sell another person’s property? This will consider duty to be cleared out, new gathering will assume control over liberated from all encumbrances, liabilities. Clearing out of Govt contribution in this style is not allowable.

 What is being proposed resembles you leasing your home to an occupant, and the inhabitant selling your home under IBC.

 New individual will assume control over the benefit, liberated from encumbrances and liabilities.

Range if dropped should be given up to DoT, might be unloaded for higher acknowledgment.

 Why was no interest raised against Airtel for past duty of Videocon range that was procured via Airtel?

 Airtel has reliably contended that no interest has been served on them by DoT.

 Trading rules state that vender of range will fulfill every pending due, before offer of range. Our comprehension is that upon non-installment of levy by vender, the exchanging rules move the weight on the purchaser.

Examination

The result of the balanced gross income (AGR) case, which will be heard in the Supreme Court on Thursday, will choose the course for telecom shares, primarily Vodafone Idea NSE – 0.56 %, which has dramatically increased over the most recent one month. The consultation may incorporate the administration’s application that telcos be permitted to spread the installment of their duty more than 20 years or less. Investigators said if the court requests that organizations pay sooner, it could acquire the assembly these offers to a sudden stop.

“In the event that they get whenever period lesser than 15-20 years to satisfy AGR obligations they won’t have a lot of cash to put resources into 4G capex. This would have suggestions on piece of the pie as without such speculations they would wind up losing piece of the overall industry,” said Rajiv Sharma, head of exploration at SBICAP Securities, which has kept its rating on Vodafone Idea under survey. “On the off chance that they need to pay everything forthright, at that point Vodafone Idea may choose to close down and they may get alluded to NCLT (the National Company Law Tribunal.

Court’s Decision

The Supreme Court in its July 20 hearing had saved its request on the administration’s appeal to permit telecom organizations, for example, Bharti Airtel, Vodafone Idea and others to make amazed installments of the balanced gross income (AGR) over a time of the 20-year time frame. The peak court likewise said that there is “no returning” on the DoT request on the AGR issues and it will just think about the course of events.

Finally, on 1st September 2020 the Court granted telecom operators 10 years to pay thousands of crores in statutory dues stemming from the top court’s October 2019 verdict that upheld the government’s calculations on adjusted gross revenue.

The carriers, however, will have to pay 10% of the total dues by March 31, 2021, according to an order of a three-judge bench headed by Justice Arun Mishra. This indicates those telecom firms that have already paid 10% or more of total dues, such as Bharti Airtel Ltd and Vodafone Idea Ltd., will have to make the next payment in 2022. There will also be an 8% interest on the pending dues during the extension that has been granted by the top court. The chairmen of the telecom companies will have to give undertakings for payments, the order said, adding that a default on payment installments will invite interest, penalty, and contempt of court.

FAQ’s

Q.1.  What is Vodafone Idea AGR Case?

The Supreme Court of India has held its request in the balanced gross income (AGR) case. This after Vodafone Idea and Bharti Airtel looked for a long time to reimburse their duty to the legislature while Tata Teleservices has said that a seven to long term period should get the job done for them. The following hearing has been planned for August 10.

The summit court tried to think about the insurance which the organizations should accommodate a course of events expansion, whenever allowed. The Solicitor General of India for the administration acknowledged the telcos proposition for making sure about the contribution by accepting the assigned range as security.

During the gathering, Vodafone Idea moreover recognized the enthusiasm of Rs 58,000 crore as duty and from the outset searched for a drawn-out period for repayment yet later corrected it to 15 years.

Q.2.Why Was No Interest Raised Against Airtel For Past Duty of Videocon Range That Was   Procured Via Airtel?

 Airtel has reliably contended that no interest has been served on them by DoT.

 Trading rules state that vender of range will fulfill every pending due, before offer of range. Our comprehension is that upon non-installment of levy by vender, the exchanging rules move the weight on the purchaser.

Q.3. What Is Being Proposed Resembles You Leasing Your Home to An Occupant, And the Inhabitant Selling Your Home Under IBC?

 New individual will assume control over the benefit, liberated from encumbrances and liabilities. Range if dropped should be given up to DoT, might be unloaded for higher acknowledgment.

Q.4. Will an Advantage (Range) That Doesn’t Have A Place with Telecom Organizations Be Sold Under IBC?

Government should move to drop permit, range if contribution is being cleared out. If telcos are reluctant to pay, we will coordinate drop of range allotment.

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