Vodafone Idea Tax Dispute: Bombay HC Directs Income Tax Dept To Pass Orders In 13 Matters In 6 Weeks

The Bombay High Court has recently directed the Income Tax Department to pass orders in 13 tax matters involving Vodafone Idea and its group companies within six weeks. The company remains free to argue that the statutory deadline for passing those orders has already expired.

The court also continued its interim protection against the recovery of ₹699.54 crore refunded to Vodafone Idea. The amount must remain in a fixed deposit and cannot be used without further orders.

A Division Bench of Justices B.P. Colabawalla and Farhan P. Dubash passed the directions on October 7. The Bench was hearing Vodafone Idea's petition seeking directions to the Department to give effect to earlier orders passed by tax authorities and courts.

The 13 matters involve ₹113.77 crore. The court directed the Department to pass orders giving effect to the earlier decisions within six weeks, without prejudice to Vodafone Idea's contention that the orders would be time-barred.

“It is needless to clarify that this direction is given without prejudice to the contention of the Petitioner that, since the time to pass the orders giving effect to the orders of the higher authorities has already expired, the passing of such orders is time-barred and, therefore, the Petitioner would be entitled to a refund as per the returned income of the Petitioner,” the court observed.

The petition also challenges the Department's attempt to recover ₹699.54 crore already credited to Vodafone Idea's bank account.

According to the order, the Assessing Officer recorded his satisfaction that the refund should not be released and obtained approval from the Principal Commissioner of Income Tax on September 8. The officer also emailed the decision to the Central Processing Centre on September 9.

Despite this, the Centre released ₹699.54 crore to Vodafone Idea on September 15, 2026. The Department later sought to recover the amount, claiming that the refund had been released by mistake.

The court had restrained the Department from recovering the money on September 22. It also directed Vodafone Idea to keep the amount in a fixed deposit without using it until further orders. The Bench has now continued that protection.

The court also set deadlines for two other groups of tax matters. In 10 matters where the limitation period expires on March 31, 2027, the Department must pass orders as expeditiously as possible, preferably by December 31, 2026.

If the Department cannot meet that date, it may seek an extension by giving adequate reasons. However, the extended deadline cannot go beyond January 31, 2027.

For four other matters, where the limitation period expires on March 31, 2028, the court directed the Department to complete the process expeditiously. The authorities must also begin verification at the earliest.

The matter will be heard next on November 2, 2026.

For Vodafone Idea (Petitioner): Senior Advocate Percy Pardiwala, along with Advocates Madhur Agrawal, Jitendra Singh, Shivali Mhatre and Rajesh Gaikwad.

For Income Tax Department (Respondents): Advocates Sushma Nagaraj, Abhinav Palsikar and Anoushka Matai.