Vodafone tax case: HC allows penalty proceedings to go on

The company raised apprehension that the tax department may not give it the stipulated 30 days and could initiate recovery proceedings within a week.

Delhi High Court on Wednesday allowed the income tax department to go ahead with its penalty proceedings against telecom major Vodafone, but asked the agency not to give effect to its final order till the next hearing in July.

A vacation bench of V Kameswar Rao and I S Mehta passed the order on Vodafone's plea seeking stay on the penalty proceedings which was initiated against it in December last year in connection with an assessment order for the year 2011-12.

". . . penalty proceedings initiated would be allowed to continue and any final order issued (by IT department) will not be given effect to till next date of hearing on July 7," the court said.

It also issued notice to the Centre and the IT department on Vodafone's plea and listed the matter for further hearing.

During the hearing on Wednesday, Vodafone told the court that the final order was expected to be passed tomorrow and pursuant to that the department would raise a demand of Rs 1,500 crore (Rs 15 billion) which would have to be deposited within 30 days.

The company raised apprehension that the tax department may not give it the stipulated 30 days and could initiate recovery proceedings within a week.

In response to this, the department said normally, the recovery proceedings are initiated after completion of the stipulated period. In the instant case, no recovery proceedings would be started till the next date, it submitted.

Vodafone also told the court that another division bench of the high court on December 23 last year had directed the department not to give effect to its assessment order, but despite that, the penalty proceedings were initiated on December 29, 2015.

The company said the penalty proceedings emanated from the assessment order, which was not to be given effect to as per the court's order.