Voda Idea gets Rs 638 cr GST penalty order, firm disagrees with order and will take legal action

New Delhi: Telecom operator Vodafone Idea (VIL) on Thursday said it has received a GST order imposing a penalty of about Rs 638 crore from the Office of the Additional Commissioner, Central Goods and Services Tax (CGST), Ahmedabad, and will challenge it legally.

In a statutory filing, the debt-laden telco said the order, passed under Section 74 of the CGST Act, 2017, confirms a penalty of Rs 6,37,90,68,254 along with applicable tax demand and interest.

The order relates to allegations of short payment of tax and excess availment of input tax credit. Vodafone Idea said it does not agree with the findings and will take appropriate legal action, adding that the maximum financial impact would be limited to the tax demand, interest and penalty levied.

The GST order comes a day after Vodafone Idea received major relief on its adjusted gross revenue (AGR) dues.

On Wednesday, the Union Cabinet approved a package freezing the telco’s AGR liabilities, granting a five-year moratorium on payments and allowing reassessment of the capped dues, providing a critical lifeline to the struggling operator.

According to sources, Vodafone Idea’s AGR dues have been frozen at Rs 87,695 crore. The company will begin repayments from the 2031-32 fiscal year and clear the dues by 2040-41.

The frozen liabilities will be reassessed by the Department of Telecommunications based on the 2020 deduction verification guidelines and audit reports, with a government-appointed committee’s decision binding on both sides.

AGR dues for FY18 and FY19, finalised following a Supreme Court order in September 2020, will continue to be paid between 2025-26 and 2030-31 without any change. Sources said this amounts to around Rs 120 crore annually, or Rs 700–800 crore over six years.

The Cabinet relief aims to protect government interests—given its nearly 49 per cent stake in Vodafone Idea—ensure orderly recovery of spectrum and AGR dues, preserve competition in the telecom sector and safeguard the interests of about 20 crore subscribers.

Vodafone Idea has been grappling with prolonged financial stress due to intense competition, high debt and massive AGR liabilities arising from a change in the definition of AGR.

As of September 30, the company reported a net loss of Rs 12,132 crore in the first half of the current fiscal, negative net worth of Rs 82,460 crore and total debt of Rs 2.02 lakh crore.