Supreme Court upholds Madras High Court order directing Cognizant to pay ₹2,956 crore in tax dues

The Supreme Court on Wednesday upheld an interim order passed by the Madras High Court in December last year directing tech company Cognizant Technology Solutions to pay ₹2,956 crore to the Income Tax Department as partial payment of its tax dues. .A Bench of Justices PS Narasimha and Aravind Kumar also permitted the Central government to encash such amount after the IT 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 High Court.The apex court directed theHigh Court to decide on the appeal within six weeks..Cognizant had approached 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 ₹9,400 crore in taxes in connection with its share buybacks worth over ₹19,000 crore between the years 2017 and 2018..On December 21 last year, Cognizant had sought an interim stay on all recovery proceedings initiated against it and offered to pay the base amount of ₹1,500 crore in cash.A Bench of Justices R Mahadevan and 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."The appellant/assessee shall make a payment of Rs.1500 crores in cash or give a letter to the Bank to remit Rs.1500 crores to the credit of the respondent from the fixed deposits available, and furnish property security for the balance tax liability with interest and penalty, to the respondent, within a period of four weeks from the date of receipt of a copy of this order. On such payment and deposit of title deeds pertaining to the property, the respondent shall release the lien on the remaining fixed deposits lying in the Banks. In the event of default on the part of the appellant in complying with the aforesaid conditions, this order shall stand vacated automatically, without any further reference to this court; and it is also open to the Revenue to recover the tax liability from the appellant in the manner known to law," the High Court had said in its order at the time..Cognizant then filed a Special Leave Petition (SLP) before the Supreme Court against this interim order, which has now been upheld..Senior Advocates Mukul Rohatgi and Balbir Singh, and Advocates Tushar Jarwal, Anuradha Dutt, Rahul Sateeja, Pranav Bansal and B Vijayalakshmi Menon appeared for Cognizant. Additional Solicitor General N Venkatraman and Advocates Raj Bahadur Yadav, Rupesh Kumar, Amit Sharma B, Anirudh Bhat and Debojyoti Mukhopadhyay appeared for the Income Tax Department..[Read Order]