Supreme Court Refuses To Interfere With HC Order Quashing ₹363 Crore GST Demand Against Vodafone Mobile Services Post Merger

The Supreme Court on Monday refused to interfere with the Bombay High Court's order quashing GST proceedings involving a ₹363 crore demand against Vodafone Mobile Services Ltd. after its merger with Idea Cellular Ltd.

A bench of Justices J.B. Pardiwala and K. Vinod Chandran dismissed the Union of India's special leave petition at the threshold.

The High Court had held that GST proceedings initiated against Vodafone Mobile Services Ltd after its merger with Idea Cellular Ltd and Vodafone India Ltd were void ab initio, as the company had ceased to exist as a separate legal entity.

The court set aside the adjudication order and held that the show cause notice itself was issued without jurisdiction. The Court held that once the NCLT approved the amalgamation on August 30, 2018, Vodafone Mobile Services ceased to have any legal existence.

Consequently, the Court held that the show cause notice issued against it was without jurisdiction and the subsequent adjudication order could not be sustained.

Before the High Court, Vodafone argued that the proceedings were without jurisdiction as they were initiated against an entity that had ceased to exist after the merger. He relied on the Supreme Court's ruling in Maruti Suzuki India Ltd.

The GST Department relied on Section 87 of the CGST Act to contend that proceedings relating to the pre-merger period could continue against the erstwhile entity. The High Court rejected this, holding that Section 87 does not permit notices to be issued to a company that no longer exists.