Supreme Court dismisses Rs. 363 Crore demand against Vodafone Idea, SCN against non-existent entity post-merger is void
In a relief to telecom service provider Vodafone Idea Limited, the Supreme Court dismissed Revenue Department’s plea seeking to revive a ₹363 crore GST demand against Vodafone Mobile Services, which had later merged with Vodafone Idea. The issue pertains to the sale of Vodafone Mobile Services' tower business to ATC Telecom Infrastructure in 2017. Despite the merger, the Directorate General of GST Intelligence issued a show-cause notice to Vodafone Mobile Services. The ruling reinforces that where an entity has ceased to exist following amalgamation, GST proceedings cannot be initiated against that non-existent entity, even though pre-amalgamation tax liabilities may continue as per Section 87 of the CGST Act. Such a defect is jurisdictional rather than a mere technical error, however, the underlying tax liability is not extinguished, and Revenue may proceed against the legally existing amalgamated entity through valid proceedings. Thereby, the Apex Court upheld Bombay HC’s stance that that Section 87 did not give the department the power to issue SCN to a company that had ceased to exist following a merger.