₹363 Crore GST Demand Against Vodafone Idea: Supreme Court Refuses to Revive Proceedings

The Supreme Court on September 7, declined to interfere with the Bombay High Court’s decision quashing a ₹363 crore Goods and Services Tax (GST) demand against Vodafone Idea arising from proceedings initiated in the name of Vodafone Mobile Services Limited after its merger.

A Bench comprising Justice J.B. Pardiwala and Justice K. Vinod Chandran dismissed the Union government’s challenge to the Bombay High Court ruling.

Background of the Case

The dispute relates to the transfer of Vodafone Mobile Services Limited’s telecom tower business to ATC Telecom Infrastructure in 2017 on a slump-sale basis as a going concern.

Vodafone Mobile Services Limited subsequently merged with Vodafone India Limited and Idea Cellular Limited under a scheme approved by the National Company Law Tribunal (NCLT) in August 2018. The merger was also brought to the notice of the GST authorities.

Despite the merger, the Directorate General of GST Intelligence issued a show-cause notice in August 2024 to Vodafone Mobile Services Limited, proposing a demand of about ₹363 crore under the Central Goods and Services Tax Act, along with interest and penalty.

The department alleged that the transfer of the business was an exempt supply and questioned the input tax credit claimed in relation to the transaction.

Bombay High Court’s Findings

Vodafone Idea challenged the proceedings before the Bombay High Court, arguing that Vodafone Mobile Services Limited had ceased to exist as a separate legal entity after the merger.

The High Court, in its April 29, 2026 judgment, accepted the challenge and quashed the adjudication order. It held that the proceedings had been initiated against a company that no longer existed and that the show-cause notice itself was without jurisdiction.

The Court observed,

“the show-cause notice itself having been issued without jurisdiction, the proceedings stand vitiated and are rendered void ab initio.”

The High Court also rejected the tax department’s reliance on Section 87 of the CGST Act, holding that the provision did not authorise proceedings against an entity that had already ceased to exist following amalgamation.

Supreme Court Decision

During Monday’s hearing, the Supreme Court declined to revive the GST proceedings and dismissed the Union of India’s challenge to the Bombay High Court ruling.

Accordingly, the Bombay High Court’s decision quashing the ₹363 crore GST proceedings against Vodafone Mobile Services Limited remains undisturbed.