The Supreme Court recently upheld an interim order passed by Madras High Court in December last year ordering tech company Cognizant Technology Solutions to pay Rs 2,956 crore to the Income Tax Department as partial payment of its tax dues.
A Supreme Court bench of Justice PS Narasimha and Justice Aravind Kumar also permitted the Central government to encash such amount after the Income Tax department submitted that the amount and the interest accrued on the same will be refunded to Cognizant if the company succeeded in its appeal filed before the Madras High Court. The apex court directed the Madras High Court to decide on the appeal within six weeks.
The tech company had moved to the Madras High Court last year challenging a September 2023 order passed by the Income Tax Appellate Tribunal (ITAT) and consequent notices demanding that the company pay Rs 9400 crore in taxes in connection with its share buybacks worth more than Rs19,000 crore between the years 2017 and 2018.
Earlier on December 21, 2023, the tech company had sought an interim stay on all recovery proceedings initiated against it and offered to pay the base amount of Rs 1,500 crore in cash.
A Madras High Court bench of Justice R Mahadevan and Justice Mohammed Shaffiq had at the time recorded the company’s submission and temporarily stayed the recovery proceedings on the condition that Cognizant pays the IT department ₹1,500 crore and creates a fixed deposit worth ₹1,456 crore. Following this, Cognizant lodged a Special Leave Petition (SLP) before the apex court against this interim order, which has been upheld.
Senior Advocate Balbir Singh, Senior Advocate Mukul Rohatgi and Advocates Tushar Jarwal, Anuradha Dutt, Rahul Sateeja, Pranav Bansal and B Vijayalakshmi Menon represented Cognizant while Additional Solicitor General N Venkataraman and Advocates Raj Bahadur Yadav, Rupesh Kumar, Amit Sharma B, Anirudh Bhat and Debojyoti Mukhopadhyay appeared for the Income Tax Department.