In a relief to telecom service provider Vodafone Idea Limited, the Supreme Court on Monday dismissed the Centre's plea seeking to revive a ₹363 crore GST demand against Vodafone Mobile Services, a company that later merged with Vodafone Idea.
The case relates to the sale of Vodafone Mobile Services' tower business to ATC Telecom Infrastructure in 2017. A Bench of Justices J B Pardiwala and N Vinod Chandran upheld the Bombay High Court's decision quashing the tax proceedings.
During the hearing, the Supreme Court questioned how tax proceedings could be initiated against a company that had ceased to exist after its merger with another entity.
Vodafone Mobile Services had agreed to sell its tower business to ATC Telecom Infrastructure as a going concern on a slump-sale basis. The company subsequently merged with Vodafone India Limited and Idea Cellular Limited under an order passed by the National Company Law Tribunal (NCLT) in August 2018.
Despite the merger, the Directorate General of GST Intelligence issued a show-cause notice to Vodafone Mobile Services in August 2024, seeking Rs 363 crore under the Central Goods and Services Tax Act, 2017, along with a penalty.
In April 2026, a Bench of Justices G S Kulkarni and Aarti Sathe of the Bombay High Court ruled in favour of Vodafone Idea. The high court said the show-cause notice had been issued without jurisdiction as it was addressed to an entity that no longer existed. It consequently held that the proceedings were invalid from the beginning. The tax department had cited Section 87 of the CGST Act, arguing that tax liabilities from the period before the merger could still be recovered.
The high court, however, held that Section 87 did not give the department the power to issue a show-cause notice to a company that had ceased to exist following a merger.