Vodafone Idea Wins ₹363 Cr GST Battle: Why SC Rejected Centre’s Plea

The Supreme Court on Monday dismissed the Centre’s challenge against a Bombay High Court order quashing a ₹363 crore GST demand against Vodafone Idea’s erstwhile entity, Vodafone Mobile Services Ltd (VMSL), according to a Mint report.

The top court upheld the view that tax proceedings cannot be continued against a company that no longer exists after a merger. A bench of Justices J.B. Pardiwala and K. Vinod Chandran said the matter was covered by the Supreme Court’s 2019 judgment in the Maruti Suzuki case.

The dispute relates to GST proceedings against VMSL over the sale of its telecom tower business. VMSL had agreed to sell the entire business to ATC Telecom Infrastructure in November 2017 through a slump sale.

Why The ₹363 Crore GST Dispute Arose

VMSL later merged with Vodafone India and Idea Cellular under an NCLT-approved scheme in August 2018. The merger was also brought to the notice of GST authorities after Idea Cellular’s GST registration was amended.

The Directorate General of GST Intelligence began its investigation in February 2024 and issued a show-cause notice to VMSL in August that year. The department sought ₹363 crore along with a penalty, alleging that the transfer of the business as a going concern was an exempt supply and that VMSL was not eligible for input tax credit.

VMSL challenged the proceedings, arguing that it had ceased to exist after the merger and therefore could not face fresh tax proceedings.

Supreme Court Backs Bombay High Court View

The Centre had argued that Section 87 of the Central Goods and Services Tax Act allowed GST liabilities involving merged companies to be dealt with even after a merger.

The Bombay High Court rejected that argument in April 2026, holding that the provision did not permit the department to issue a notice against an entity that had already ceased to exist. It said the notice was issued without jurisdiction and that the proceedings were void from the beginning.

The Supreme Court referred to its July 2019 ruling in the Maruti Suzuki case, where it held that tax proceedings against a company that had ceased to exist following an amalgamation were invalid, particularly when authorities were aware of the merger.

For Vodafone Idea, the ruling comes as the telecom operator continues to work through financial challenges. Its subscriber base rose to 193.1 million in the June quarter from 192.8 million in the previous quarter, while its net loss narrowed to ₹3,754 crore from ₹6,608 crore a year earlier.

The company plans to raise ₹35,000 crore from banks for network expansion and has around ₹49,000 crore in spectrum dues to repay over the next three years.