Vodafone Idea hit with ₹83cr GST penalty, plans legal action
What's the story
Vodafone Idea has been slapped with two separate GST penalty orders from tax authorities in Mumbai and Bengaluru. The total financial exposure from these penalties amounts to over ₹83 crore. The telecom giant announced this development in a regulatory filing on Thursday. The company said it would take appropriate legal action against the orders for rectification or reversal.
Penalty details
Mumbai tax authority imposes ₹79.56cr penalty
The Deputy Commissioner of State Tax, Andheri Division in Mumbai, has imposed a penalty of ₹79.56 crore on Vodafone Idea. The order was issued on December 24 and pertains to an alleged additional demand on license fees and spectrum usage charges for FY 2018-19. Along with the penalty, the order also includes applicable tax demand and interest charges against the telecom operator.
Second penalty
Bengaluru tax authority issues ₹3.58cr penalty
The Office of the Principal Commissioner of Central GST, Domlur Commissionerate in Bengaluru, has also imposed a penalty on Vodafone Idea. The amount is ₹3.58 crore and pertains to an alleged short payment of tax and excess input tax credit claims for the period from FY 2018-19 to FY 2022-23. Like the Mumbai order, this one too was received on December 24 with applicable demand and interest charges.
Market response
Vodafone Idea's financial impact and share performance
Vodafone Idea has said that the maximum financial impact from these penalties will be limited to the tax demand, interest, and penalties levied. The company also clarified that it doesn't agree with these orders. Despite this setback, the company's shares have been on a rally in recent months, gaining nearly 100% since August lows to ₹12 apiece. This is mainly due to positive sentiment after better-than-expected Q2 results, relief on AGR dues, and reports of potential tariff hikes next year.