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Informist, Monday, Sept. 7, 2026

 

--SC rejects GST dept's plea to demand INR 3.6 bln from Vodafone Idea

 

NEW DELHI – The Supreme Court Monday rejected the goods and services tax department's plea to demand INR 3.6 billion from Vodafone Idea Ltd. on the sale of Vodafone Mobile Services Ltd.'s tower business to ATC Telecom Infrastructure. The top court questioned how proceedings could have been started against Vodafone Mobile Services Ltd., which had merged into Vodafone Idea previously, and is currently a non-existent entity.

 

The apex court upheld the Bombay High Court's order that had quashed the tax department's demand against Vodafone Idea observing that post merger, the merged entity has no status in the eyes of law, and therefore no proceedings can be initiated against it. The high court had said that the proceedings against Vodafone Mobile was without jurisdiction and the same "stood vitiated" and rendered "void ab initio".  

 

 

The case has its genesis from Vodafone Mobile entering into a business transfer agreement with ATC Telecom to sell the entire tower business with all rights and liabilities as a going concern on a slump-sale basis. Vodafone Idea said that the slump sale, which was a sale of the entire business, could not be considered as "supply" in the course of business, hence, the same was never declared in the GST returns. Since the tower business was on pan India basis, and the calculation of the slump sale transaction for each state and circle was not possible, hence no invoice was issued, said Vodafone Idea.

 

In 2018, the National Company Law Tribunal had approved Vodafone Mobile's merger with Vodafone Idea and the same was informed to the tax department. However, in 2024, the Directorate General of GST Intelligence issued summons to Vodafone Idea under Section 70 of the Central Goods and Services Tax Act, 2017 relating to sale of Vodafone Mobile's business.

 

Thereafter, the tax department demanded INR 3.63 billion from Vodafone Idea, along with penalty on ground that the services by way of transfer of a going concern as a whole or independent part thereof is an exempted supply and Vodafone Mobile was not entitled to take input tax credit on the same. Challenging the tax department's demand, Vodafone Idea moved the high court.

 

Vodafone Idea had argued that the tax department's demand was nullity, being passed against a non-existent entity, hence, the same is wholly without jurisdiction. The demand is vitiated by breach of the principles of natural justice, as none of the petitioner's submissions regarding the legal effect of the merger have been considered, said the company. The demand being raised against a non-existent entity is contrary to the settled principles of law laid down by the Supreme Court, said the company.

 

The tax department had said that the apex court's earlier ruling to not initiate income tax proceedings against non-existent companies applies to only income tax cases and not applied to goods and services tax cases. The goods and services tax law is a complete code in itself and has provisions for fixing the past liabilities including in case of amalgamations and mergers, said the department. Section 87(2) of the Central Goods and Services Tax Act governs the liability in case of amalgamation or merger of companies and states that "Notwithstanding anything contained in the said order, for the purposes of this Act, the said two or more companies shall be treated as distinct companies for the period up to the date," it said. All the goods and services tax liabilities for the period up to the date of order of merger is to be fixed on the erstwhile goods and services tax identification number registered with the department even if the recovery proceedings are initiated after the merger, said the department.

 

At 1302 IST, the shares of Vodafone Idea Ltd. were up 2.8% at INR 15.44 on the National Stock Exchange.  End  

 

IST, or Indian Standard Time, is five-and-a-half hours ahead of GMT

 

Reported by Surya Tripathi

Edited by Akul Nishant Akhoury

 

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