The Supreme Courtroom on Monday dismissed the Centre’s problem to a Bombay Excessive Courtroom order quashing a ₹363 crore GST demand towards Vodafone Thought in relation to its erstwhile entity, Vodafone Cellular Providers Ltd (VMSL).
The court docket upheld the view that tax proceedings can’t be continued towards an organization that now not exists after a merger.
A bench of Justices J.B. Pardiwala and Ok. Vinod Chandran, rejecting the tax division’s plea, stated the problem was already coated by the Supreme Courtroom’s 2019 judgment within the Maruti Suzuki case, which handled tax proceedings towards an organization after its merger.
The dispute considerations GST proceedings towards VMSL arising from the sale of its telecom tower enterprise as a going concern. VMSL had entered into an settlement with ATC Telecom Infrastructure on 13 November 2017 to promote its total tower enterprise on a slump-sale foundation.
VMSL later merged with Vodafone India Ltd and Thought Mobile beneath an NCLT order dated 30 August 2018. The merger was additionally dropped at the discover of the GST authorities when Thought Mobile’s GST registration was amended.
The Directorate Common of GST Intelligence started its investigation in February 2024. On 1 August 2024, it issued a show-cause discover to VMSL demanding ₹363 crore together with a penalty. The division alleged that the switch of the enterprise as a going concern was an exempt provide and that VMSL was not entitled to enter tax credit score.
VMSL challenged the proceedings, arguing that it had already ceased to exist following the 2018 merger and couldn’t be subjected to recent tax proceedings.
The Centre relied on Part 87 of the CGST Act, arguing that the supply permits GST liabilities of firms concerned in a merger to be addressed even after the merger.
The excessive court docket rejected this argument in its 29 April 2026 order. It held that Part 87 doesn’t permit the division to challenge a discover towards an entity that had already ceased to exist.
The excessive court docket stated that after a merger, the previous firm has no standing in legislation, and proceedings can’t be initiated towards it. It held that the show-cause discover was issued with out jurisdiction and that the proceedings have been void from the start. The Centre subsequently moved to the Supreme Courtroom.
The Supreme Courtroom referred to its 25 July 2019 judgment within the Maruti Suzuki India Ltd tax case, the place the highest court docket held that tax proceedings towards an organization that had ceased to exist following an amalgamation have been invalid, notably when the tax authorities have been conscious of the merger. The Maruti Suzuki case concerned an income-tax evaluation following the merger of Suzuki Powertrain India Ltd with Maruti Suzuki India Ltd.
For Vodafone Idea, the ruling comes at a time when the nation’s third-largest telecom operator is making an attempt to regain its footing after reporting its first quarterly subscriber addition for the reason that merger. Its buyer base rose to 193.1 million in June quarter (Q1FY27) from 192.8 million within the previous quarter.
Vodafone’s funds
The corporate’s internet loss narrowed to ₹3,754 crore in Q1FY27 from ₹6,608 crore a 12 months earlier. Income rose 6% year-on-year to ₹11,689 crore, whereas quarterly Ebitda elevated 9.1% to ₹5,034 crore.
Vi, nevertheless, continues to face monetary strain. It plans to lift ₹35,000 crore from banks for community enlargement and has ₹49,000 crore in spectrum dues to repay over the subsequent three years. It additionally must generate constructive money circulation.
Queries have been despatched to Vodafone Thought and the GST division searching for their response to the Supreme Courtroom order. Their responses have been awaited until press time
