Supreme Court Holds Distributors of Telecom Companies are not Agents and there is no Obligation to Withhold Tax

In a recent ruling, the Supreme Court held that distributors of pre-paid recharge vouchers were not ‘agents’ of the telecom companies. Consequently, the telecom companies were not obligated to deduct tax on the discount provided to the distributors. The ruling settles an issue on which various High Courts expressed divergent views in the past. The Court delivered its judgment in a batch of tax appeals, with the lead case being that of Bharti Airtel Ltd.