Supreme Court Notifies Hearing on Vedanta Income Tax Department Dispute Over Tax Deduction Shortfall
Supreme Court Seeks Response from Vedanta Ltd on Income Tax Department Appeal
The Supreme Court on Monday issued a notice to Vedanta Ltd, seeking a response to an appeal filed by the Income Tax Department challenging a Madras High Court judgment that granted partial relief to the company in a dispute over alleged tax deduction at source (TDS) defaults linked to payments made to a foreign group entity.
A Bench comprising Justices KV Viswanathan and Vijay Bishnoi condoned a delay of 151 days in the filing of the special leave petition (SLP) by the department before issuing notice in the matter. The Bench directed the matter to be tagged with a similar case already pending before the top court, SLP (C) 10077 of 2026.
The dispute stems from payments made by Vedanta Limited between assessment years 2009-10 and 2014-15 to Vedanta Resources Public Limited Company, a non-resident group entity, under consultancy and representative office arrangements. The Income Tax Department alleged that no tax had been deducted at source on these remittances and subsequently treated the company as an assessee in default.
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Show cause notices and tax demands were thereafter issued for assessment years 2010-11 to 2015-16. Vedanta challenged the proceedings before the Madras High Court, arguing that the proceedings were barred by limitation and citing several judicial precedents that had treated four years as the reasonable period in similar cases.
Key Dates in the Dispute
| Date | Event |
|---|---|
| February 24, 2023 | Madras High Court ruling that proceedings of this nature could be initiated within a "reasonable period" |
| August 29, 2025 | Division Bench partly ruled in Vedanta's favour, treating six years as the appropriate benchmark |
The Madras High Court observed that a "one-size-fits-all" approach ill-fits the facts on hand and refused to prescribe a rigid limitation period. The Bench treated six years as the appropriate benchmark and consequently quashed proceedings for assessment years 2010-11 and 2012-13 to 2015-16, while sustaining proceedings relating to assessment year 2011-12.
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