SC rejects Centre plea to revive ₹363 cr GST demand against Vodafone Idea

The Supreme Court on Monday dismissed the Centre’s appeal seeking to restore a ₹363 crore goods and services tax (GST) demand against Vodafone Idea, after the Bombay High Court had struck down the proceedings against a company that no longer existed following a merger, Bar and Bench reported.

A Bench of Justices J B Pardiwala and N Vinod Chandran upheld the high court’s decision. During the hearing, the Bench questioned how tax proceedings could be started against a company that had ceased to exist after its merger with another entity.

Dispute over transfer of telecom tower business

The case relates to the transfer of Vodafone Mobile Services Limited’s telecom tower business to ATC Telecom Infrastructure in 2017.

Vodafone Mobile Services had agreed to sell the 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. The merger was also communicated to the GST authorities.

Despite the merger, the Directorate General of GST Intelligence issued a show-cause notice to Vodafone Mobile Services in August 2024, seeking ₹363 crore under the Central Goods and Services Tax Act, 2017, along with a penalty.

The department argued that the transfer of the business as a going concern was an exempt supply. It said Vodafone Mobile Services was therefore not eligible to claim input tax credit to the extent it had done so.

An adjudication order was subsequently passed in January 2025. Vodafone Idea challenged the tax proceedings before the Bombay High Court, saying Vodafone Mobile Services had ceased to exist after the merger and could not be made the subject of fresh proceedings.

Bombay HC had quashed proceedings

In April 2026, a Bench of Justices G S Kulkarni and Aarti Sathe ruled in favour of Vodafone Idea. The high court said the show-cause notice had been issued without jurisdiction because 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, the news report said.

The apex court's dismissal of the Centre’s appeal leaves the Bombay High Court ruling in place.

Vodafone Idea shares rise 4%

Vodafone Idea shares rose nearly 4 per cent during Monday’s intra-day trading on the BSE amid heavy volumes. The stock touched a 25-month high of ₹15.65 and extended its gains from Friday. At this level, the stock was trading at its highest since August 30, 2024.

The gains came after Vodafone Idea unveiled a new brand identity and campaign. Last week, the telecom operator appointed actor Shah Rukh Khan as its brand ambassador. It introduced a new logo, replacing “V!” with “Vi”, along with the campaign “Vi badal raha hai... tayaar rahiye” (Vi is changing... Be ready).