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Supreme Court Rejects Centre’s ₹363 Crore Vodafone Idea GST Challenge
The Supreme Court ruled in favor of Vodafone Idea in a tax dispute.
The dispute involved a former company called Vodafone Mobile Services Ltd.
That company had merged into other companies in 2018 and no longer legally existed.
Tax officials later issued it a demand for ₹363 crore.
The officials said the company owed GST related to the sale of its telecom tower business.
Vodafone Idea argued that officials could not start a case against a company that had disappeared through a merger.
The Supreme Court agreed with the earlier Bombay High Court decision and rejected the government’s challenge.
Vodafone Idea has recently gained some subscribers and reduced its quarterly loss.
However, it still has large spectrum payments and needs money to expand its network.
The Supreme Court dismissed the Centre’s challenge to a Bombay High Court ruling that quashed a ₹363 crore GST demand against Vodafone Mobile Services Ltd.
The court held that tax proceedings cannot continue against a company that ceased to exist after a merger, citing its 2019 Maruti Suzuki judgment.
The GST dispute arose from Vodafone Mobile Services’ 2017 sale of its telecom tower business to ATC Telecom Infrastructure as a going concern.
The Directorate General of GST Intelligence issued a show-cause notice in August 2024, alleging the transfer was exempt from GST and input tax credit was improperly claimed.
Vodafone Idea’s subscriber base and financial results improved in Q1FY27, but the company still faces major spectrum dues and plans to raise ₹35,000 crore for network expansion.
- Who
- The Supreme Court, the Centre’s tax authorities, Vodafone Idea, and its former entity Vodafone Mobile Services Ltd were involved.
- What
- The Supreme Court dismissed the Centre’s challenge to the quashing of a ₹363 crore GST demand and related proceedings.
- Where
- The case was heard in the Supreme Court and concerned proceedings originating in the Bombay High Court and GST authorities.
- When
- The Supreme Court ruling was reported on Monday; the GST notice was issued on 1 August 2024, after the 2018 merger.
- Why
- The courts held that proceedings could not be initiated against Vodafone Mobile Services Ltd after it ceased to exist following its merger.
Vodafone Idea and Courts
Centre and Tax Authorities
Proceedings after merger
Vodafone Idea and Courts
Vodafone Idea argued that Vodafone Mobile Services Ltd had ceased to exist after the 2018 merger and could not face fresh tax proceedings.
Centre and Tax Authorities
The Centre relied on Section 87 of the Central Goods and Services Tax Act, arguing that GST liabilities connected with companies involved in a merger could still be addressed after the merger.
Validity of GST notice
Vodafone Idea and Courts
The Bombay High Court and Supreme Court held that issuing the notice to the defunct entity was without jurisdiction and invalid, consistent with the 2019 Maruti Suzuki judgment.
Centre and Tax Authorities
The Centre challenged the Bombay High Court’s decision and sought to continue the ₹363 crore GST proceedings.
Tax treatment of tower sale
Vodafone Idea and Courts
Vodafone Mobile Services disputed the department’s action in relation to its sale of the telecom tower business and its input tax credit position.
Centre and Tax Authorities
The Directorate General of GST Intelligence alleged that the going-concern transfer was an exempt supply and that Vodafone Mobile Services was not entitled to input tax credit.
Key facts
- GST demand
- ₹363 crore, along with a penalty, was demanded from Vodafone Mobile Services Ltd.
- Business sale
- Vodafone Mobile Services agreed on 13 November 2017 to sell its entire telecom tower business to ATC Telecom Infrastructure.
- Merger date
- Vodafone Mobile Services later merged with Vodafone India and Idea Cellular under an NCLT order dated 30 August 2018.
- Tax notice
- The Directorate General of GST Intelligence issued the show-cause notice on 1 August 2024.
- High Court ruling
- The Bombay High Court ruled on 29 April 2026 that the notice was without jurisdiction and void from the beginning.
- Subscriber base
- Vodafone Idea’s customer base rose to 193.1 million in Q1FY27 from 192.8 million in the preceding quarter.
- Financial position
- Vodafone Idea reported a ₹3,754 crore net loss and ₹11,689 crore revenue in Q1FY27, while planning to raise ₹35,000 crore for network expansion.
Sources
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