The Supreme Court has dismissed the Centre's appeal against a Bombay High Court ruling that had quashed a ₹363 crore GST demand against Vodafone Idea over a merged entity. According to reports from Business Standard, a Bench of Justices J.B. Pardiwala and N Vinod Chandran upheld the high court's decision on Monday, September 7. 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. The court's dismissal of the Centre's appeal leaves the Bombay High Court's ruling in place, providing definitive relief to the telecom company in this significant tax dispute.
The GST department's appeal was seeking ₹363 crore from Vodafone Idea in relation to its erstwhile entity Vodafone Mobile Services Ltd (VMSL), making this a substantial financial matter for the telecom company. As reported by Business Standard, the dispute concerns GST proceedings arising from the sale of VMSL's telecom tower business as a going concern. VMSL had entered into an agreement with ATC Telecom Infrastructure on 13 November 2017 to sell its entire tower business on a slump-sale basis, and later merged with Vodafone India Ltd and Idea Cellular under an NCLT order dated 30 August 2018. Despite the merger, the Directorate General of GST Intelligence issued a show-cause notice to VMSL in August 2024, demanding ₹363 crore along with a penalty. The department alleged that the transfer of the business as a going concern was an exempt supply and that VMSL was not entitled to input tax credit.
The Directorate General of GST Intelligence began its investigation in February 2024 and issued a show-cause notice to VMSL on 1 August 2024, demanding ₹363 crore along with a penalty. The department alleged that the transfer of the business as a going concern was an exempt supply and that VMSL was not entitled to input tax credit. An adjudication order was subsequently passed in January 2025. VMSL challenged the proceedings, arguing that it had already ceased to exist following the 2018 merger and could not be subjected to fresh tax proceedings. The Bombay High Court rejected the Centre's argument in its 29 April 2026 order, holding that Section 87 of the CGST Act does not allow the department to issue a notice against an entity that had already ceased to exist. The high court ruled that the show-cause notice had been issued without jurisdiction because it was addressed to an entity that no longer existed, making the proceedings invalid from the beginning.
This Supreme Court ruling provides relief to the telecom company in its ongoing tax disputes with the government authorities. According to Business Standard, Vodafone Idea shares rose nearly 4% during Monday's intra-day trading on the BSE, touching a 25-month high of ₹15.65 amid heavy volumes. The stock was trading at its highest level since August 30, 2024. The gains came after Vodafone Idea unveiled a new brand identity and campaign, with the company appointing actor Shah Rukh Khan as its brand ambassador and introducing a new logo replacing "V!" with "Vi" along with the campaign "Vi badal raha hai... tayaar raha hai" (Vi is changing... Be ready).
