The Bombay High Court has ordered the Income Tax Department to repay Vodafone Idea $1,128 crore in taxes paid by the telecom operator for the fiscal year 2016-2017. The Bombay High Court ruled on Wednesday that the assessment decision issued by the department against the ailing telecom operator in August this year was "time barred and thus cannot be sustained."

The issue involves a petition filed by Vodafone Idea claiming that the amount paid for the fiscal year 2016-2017 was in excess of the legal tax payable on its profits and that the I-T department neglected to refund it to the company.

A division bench of Justices K R Shriram and Neela Gokhale also took a strong stance against the assessing officer for exhibiting "laxity and lethargy" in failing to issue the final ruling within the stipulated 30-day period, resulting in a massive loss to the exchequer and the people.

The court further suggested that a full investigation be launched into the assessing officer's failure to act in accordance with the terms of the Income Tax Act. The court ordered that the proceedings be concluded within 30 days.

"Strict action should be taken against those responsible for the laxity and lethargy displayed, which has resulted in a huge loss to the exchequer and, in turn, to the citizens of this country," the HC added, directing that a copy of its order be sent to the Union Ministry of Finance.

According to the petition, the assessing officer issued a draft order for the assessment year in December 2019, to which the company objected in January 2020 before the Dispute Resolution Panel (DRP). The DRP provided specific instructions in March 2021.

According to Vodafone Idea's petition, the assessing officer should have issued the final order in the case within 30 days, as required by the Act. The corporation claimed that because the officer failed to pass the final order, it was entitled to a refund with interest.

The company further stated that after filing a petition in HC in June 2023 demanding a refund, the assessing officer issued the final assessment order in August.