The Supreme Court on Monday refused to revive a ₹363 crore Goods and Services Tax (GST) demand against Vodafone Idea after the Bombay High Court had quashed proceedings initiated against an entity that had ceased to exist following a merger. [Union of India v. Vodafone]

A Bench of Justices JB Pardiwala and N Vinod Chandran dismissed the Centre’s appeal against the High Court ruling.

During the brief hearing, the Bench questioned how proceedings could have been initiated against a non-existent entity after amalgamation.

The dispute arose from a GST demand linked to the transfer of Vodafone Mobile Services Limited’s telecom tower business to ATC Telecom Infrastructure in 2017. Vodafone Mobile Services had entered into an agreement with ATC Telecom Infrastructure for sale of its tower business as a going concern on a slump-sale basis.

Vodafone Mobile Services later merged with Vodafone India Limited and Idea Cellular Limited pursuant to an August 2018 order of the National Company Law Tribunal. The merger was also intimated to the GST authorities.

In August 2024, the Directorate General of GST Intelligence issued a show-cause notice to Vodafone Mobile Services demanding ₹363 crore under the Central Goods and Services Tax Act, 2017, along with penalty. The department’s case was that the transfer of a going concern was an exempt supply and that the company was consequently not entitled to avail input tax credit to the extent claimed. An adjudication order was later passed in January 2025.

Vodafone Idea challenged the proceedings before the Bombay High Court, arguing that Vodafone Mobile Services had ceased to exist following the merger and that proceedings could not be initiated against a non-existent entity.

In April 2026, a Bench of Justices GS Kulkarni and Aarti Sathe accepted the challenge. The High Court held that the show cause notice itself had been issued without jurisdiction and that the proceedings were therefore void from the outset.

The tax department had relied on Section 87 of the CGST Act to contend that liabilities relating to the period before the merger could still be pursued. The High Court, however, held that the provision did not authorise the department to issue a show-cause notice to a company that had ceased to exist after amalgamation

The Union of India was represented by Additional Solicitor General Dwarakanath.