Amalgamation relates back to the appointed date, and inter se transfers may escape sales tax treatment.

A sanctioned amalgamation scheme specifying an appointed date was treated as operating from that date where the court did not fix a different effective date, so inter se transfers between the amalgamating companies during the intervening period were characterised as branch transfers and not sales exigible to tax. The commentary also notes that writ jurisdiction may not be used to halt revisional proceedings at the notice stage where the facts are complex and require fuller examination. In that context, the principle of unjust enrichment was treated as relevant to any refund or adjustment, so relief could be conditioned on whether the tax burden had been passed on to third parties.

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Issues: (i) Whether, on sanction of the amalgamation scheme, the effective date of amalgamation related back to the appointed date in the scheme, with the result that inter se transfers between the transferor and transferee companies during the interregnum were not sales exigible to tax under the Gujarat Sales Tax Act, 1969; (ii) whether the writ court should interdict the revisional proceedings at the notice stage and whether the principle of unjust enrichment could be considered while granting relief.

Issue (i): Whether, on sanction of the amalgamation scheme, the effective date of amalgamation related back to the appointed date in the scheme, with the result that inter se transfers between the transferor and transferee companies during the interregnum were not sales exigible to tax under the Gujarat Sales Tax Act, 1969.

Analysis: The scheme specified an appointed date and the High Court sanction order did not prescribe any different effective date. In such a situation, the sanction of the scheme operates from the date stated in the scheme itself. Once amalgamation takes effect from that date, the transferor companies cease to have independent legal existence from then on for the purposes of the scheme, and transfers between the amalgamating entities are to be treated as branch transfers rather than sales. The reasoning was reinforced by the absence of any corresponding statutory provision in the Gujarat Sales Tax Act, 1969 comparable to the later express treatment introduced in section 52 of the Gujarat Value Added Tax Act, 2003.

Conclusion: The effective date of amalgamation related back to the appointed date, and such inter se transactions were not, in principle, sales exigible to tax; this conclusion was in favour of the assessee.

Issue (ii): Whether the writ court should interdict the revisional proceedings at the notice stage and whether the principle of unjust enrichment could be considered while granting relief.

Analysis: The revisional authority had only issued notice and the transaction pattern was complex, involving multiple companies and partially merged entities, so the factual and legal consequences were not fit for summary termination in writ jurisdiction. At the same time, the court held that equity in writ proceedings cannot ignore whether the tax burden was passed on. The principle of unjust enrichment, though classically associated with refund of indirect taxes, was held relevant where relief would effectively result in retention of amounts already passed on to others. The court therefore permitted the revision to proceed, while directing that any refund or adjustment must be tested against whether the burden had been shifted to third parties.

Conclusion: The revisional proceedings were not quashed, and the plea based on unjust enrichment was left open for examination in the revision; this issue was partly against the assessee.

Final Conclusion: The petition succeeded only to the extent of securing a declaration on the legal effect of amalgamation, but the revisional proceedings were allowed to continue with directions to consider the tax consequence and the bar of unjust enrichment on the facts.

Ratio Decidendi: Where a sanctioned amalgamation scheme specifies an appointed date and the court does not substitute another date, the amalgamation relates back to the appointed date, and inter se transfers between the amalgamating entities from that date are not sales for tax purposes; however, writ relief may be refused or confined where the factual matrix requires fuller examination and where unjust enrichment may arise in relation to indirect tax burden.

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