The Bombay High Court has quashed Rs. 363 crore GST demand raised against Vodafone Idea Ltd., holding that proceedings initiated against a non-existent entity post-merger are without jurisdiction and void ab initio.
The Bench of Justices G. S. Kulkarni and Aarti Sathe allowed the writ petition filed by Vodafone Idea Ltd. under Article 226 of the Constitution, quashing the impugned adjudication order dated January 29, 2025.
The dispute traces back to a business restructuring exercise wherein Vodafone Mobile Services Ltd. (VMSL) merged with Vodafone India Limited and Idea Cellular Limited pursuant to an order of the National Company Law Tribunal (NCLT) dated August 30, 2018.
Prior to the merger, VMSL had transferred its telecom tower business to ATC Telecom Infrastructure through a slump sale agreement dated November 13, 2017. The petitioner contended that such transfer of a going concern does not qualify as a “supply” under GST law and was therefore not declared in GST returns.
Subsequently, the Directorate General of GST Intelligence (DGGI) initiated an investigation and issued a show cause notice dated August 1, 2024, demanding ₹363 crore under Section 74 of the CGST Act on the ground that the transaction constituted an exempt supply, thereby disallowing input tax credit (ITC).
Despite detailed replies filed by the petitioner, the adjudicating authority passed the impugned order without considering the submissions, prompting Vodafone Idea to approach the High Court.
The central issue before the Court was whether GST proceedings, including issuance of show cause notice and adjudication order, could be validly initiated and continued against an entity that had ceased to exist due to amalgamation.
Vodafone Idea argued that the proceedings were fundamentally flawed as they were initiated against VMSL, a non-existent entity post-merger, despite the department being fully aware of the amalgamation.
The High Court accepted the petitioner’s contention and relied heavily on the Supreme Court’s ruling in Principal Commissioner of Income Tax v. Maruti Suzuki India Ltd., which laid down that any proceedings initiated against a non-existent entity are void ab initio.
The Court noted that once a scheme of amalgamation is approved, the amalgamating entity ceases to exist in the eyes of law, and any action taken against such entity is inherently without jurisdiction.
It further held that mere participation of the amalgamated entity in proceedings does not cure the jurisdictional defect, as there can be no estoppel against law.
The department contended that Section 87 of the CGST Act permits continuation of proceedings against the erstwhile entity for the pre-merger period. However, the Court rejected this argument, clarifying that Section 87 applies only to inter se transactions between merging entities during the interim period and does not authorize proceedings against a non-existent entity post-merger.
The Bench emphasized that while tax liabilities may survive and can be enforced against the amalgamated entity, the proceedings must be correctly initiated in the name of the legally existing entity.
Holding that the show cause notice itself was issued without jurisdiction, the Court ruled that the entire proceedings stood vitiated. Consequently, the impugned order dated January 29, 2025 was quashed.
Case Details
Case Title: Vodafone Idea Ltd.Versus UOI
Citation: JURISHOUR-1042-HC-2026(BOM)
Case No.: Writ Petition No. 6637 Of 2025
Date: 29/04/2026
Counsel For Petitioner: Darius Shroff, Senior Counsel
Counsel For Respondent: Y. S. Bhate
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