SC Waives Interest on Tax Dues on Telcos Resulting From Its Decision Classifying Licence Fee as Capital Exp.

Case Details: CIT v. Bharti Hexacom Ltd. - [2024] 162 taxmann.com 669 (SC)

Judiciary and Counsel Details

• Mrs B.V. Nagarathna & Ujjal Bhuyan, JJ.
• N. Venkatraman, A.S.G., Arijit Prasad, Rupesh Kumar, Sr. Adv., Raj Bahadur Yadav, AOR, S.A. Haseeb, Mrs Gargi Khanna, Rajesh K. Singh & Manish Pushkarna, Advs. for the Appellant. 
• Arvind P. Datar, Sr. Adv., Ms Kavita Jha, Ms Vijayalakshmi Menon, AORs, Vaibhav Kulkarni, Udit Naresh, Ms Disha Jham & Devansh Jain, Advs. for the Respondent.

Facts of the Case

The Supreme Court, in the case of CIT v. Bharti Hexacom Ltd. [2023] 155taxmann.com 322 (SC) , overruled the Delhi High Court’s ruling and held that payment of license fee to DoT under Telecom Policy, 1999 was capital in nature.

It was argued that this judgment necessitates new orders on interest payments for tax demands post-1999 Telecom Policy. This places a heavy burden on assessees from the 2000-2001 assessment year onwards, prompting them to seek a waiver of interest for this period.

Revenue objected to this submission by contending that now that the tax demand would have to be met by the Assessees, it is logical that the interest on the said demand would also have to be paid.

Supreme Court Held

The Supreme Court observed that since the judgment of this Court was dated 16.10.2023, and having regard to the Telecom Policy, which commenced from the year 1999, the payment of interest for the period for which the tax demand is now to be met in respect of these cases stands waived.

The Supreme Court held that this order shall not be a precedent in any other case as this order has been passed, bearing in mind the peculiar facts of this case and having regard to the lapse of time in litigation before the Delhi High Court and Supreme Court.