Supreme Court Upholds Bharti Airtel's Stand, Dismisses ₹244 Crore Tax Demand

The Supreme Court on Monday dismissed an appeal filed by the Central Goods and Services Tax (CGST) department. The department sought to levy service tax amounting to ₹119 crore and impose a penalty of ₹125 crore on Bharti Airtel. This demand was concerning a call free allowance waiver that the telecom company offered to its employees.

Bharti Airtel had implemented the 'Airtel Employees Services Scheme', which provided a waiver on telephone charges up to a certain limit for mobile and fixed-line connections used by its employees. The waiver was specifically for employees of Bharti Airtel and did not extend to their relatives or employees of other group companies.

A bench, led by Justice J.B. Pardiwala, upheld the January order from the Chandigarh bench of the Customs, Excise And Service Tax Appellate Tribunal (CESTAT). The tribunal had previously quashed the tax department's demand, including the penalty, against Bharti Airtel.

Impact This ruling provides significant relief to Bharti Airtel, saving them from a substantial tax liability and penalty. It reinforces the interpretation of employee benefits and their tax treatment, potentially setting a precedent for similar cases within the telecom sector and other industries. The decision is positive for company financials and investor confidence. Rating: 6/10.

Difficult terms

Service Tax: A tax levied by the government on services provided.

Penalty: An amount of money imposed as a punishment for not following a law or rule.

Supreme Court: The highest judicial body in India, whose decisions are binding.

Central Goods and Services Tax department: The government agency responsible for administering and collecting GST.

Dismissed: Officially rejected or ruled against.

Levy: To impose or collect a tax or fine.

Call free allowance: A feature in a phone plan that allows a certain number of free calls without charge.

Waiver: The act of voluntarily giving up a claim or right to something, in this case, a part of the telephone charge.

Customs, Excise And Service Tax Appellate Tribunal (CESTAT): An appellate body that hears and decides on appeals related to customs, central excise, service tax, and other indirect taxes.

Quashed: Officially declared invalid or void; annulled.