TaxTMI 
TaxTMI 
2020 (2) TMI 1256
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....nt M/s. Manipal Health Enterprises Private Limited (the resulting company) was incorporated as a private Limited company under Companies Act, 1956 and is engaged in the business of health care services for the establishment, promotion and maintenance of hospitals, multi-speciality health hospitals, ICCU's health care centres for treatment, prevention, detection and cure of diseases, ailments etc., both in India and abroad. Manipal Health Systems Private Limited (the demerged company) is involved in the business of establishing, promoting or otherwise carrying on the business of running of nursing homes, hospitals, ICCU, nature-cure centre, clinics for treatment, prevention, detection and cure of diseases and ailments of all kinds, etc. In the normal course of activities, the appellant had availed taxable services in the nature of renting of health care infrastructure and management consultancy services from MHSPL on which applicable service tax was charged by MHSPL from the appellant and was duly paid to the government until March 2016. Thereafter the MHSPL proposed to enter into a Scheme of Arrangement with the MHEPL for the transfer of their "Core Health Care Business" sector com....
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....to the appellant's account. Aggrieved by the order-in-original the Department filed appeal before the Commissioner of Central Tax and the Commissioner of Central Tax set aside the order of the original authority. Hence the present appeal. 3. Heard both the parties and perused the records. 4. Learned counsel for the appellant submitted that the impugned order is not sustainable in law as the same has been passed without properly appreciating the facts and the law and also the binding judicial precedents. He further submitted that the impugned order has been passed without properly appreciating the approved Scheme of Arrangement sanctioned by the Hon'ble High Court of Karnataka vide order dated 04.12.2015 which is a judicial order and has statutory binding force in law. He further submitted that the impugned order has been passed without due consideration of the approved Scheme of Arrangement where the appointed date and merger date is 01.04.2014 upon the scheme becoming effective. He further submitted that the impugned order has been passed without due consideration of the approved Scheme of Arrangement wherein it is provided that all the present assets or receivables of the demer....
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....d position of Law that the approved Scheme of Arrangement, sanctioned by the Hon'ble High Court of Karnataka vide order dated 04.12.2015 is a judicial order and has statutory binding force in Law and cannot be subsequently challenged and/or objected by the Department. In support of his submission, he relied upon the following decisions: * J.K. (Bombay) Private Limited vs. New Kaiser-I Hind Spinning and Weaving Co. Ltd. And others (1969) 2 SCR 866: AIR 1970 SC 1041: (1970)40 Comp Cas 689 * Telesound India Ltd., company petition No.54 of 1980 decided on 05.12.1980 * Wood Polymer Ltd., (1977) 109 ITR 177 (Gujarat) 4.2 Learned counsel has also submitted that the issue involved in the present case and has been settled by the Hon'ble Apex Court in the case of Marshall Sons & Co. (India) ltd. Vs. Income Tax Officer 1997 (2) SCC 302. Where the Hon'ble Supreme Court has held that after the Court so specifies the date, there is little doubt such date would be the date of amalgamation/date of transfer, where the court does not prescribe any specific date but merely sanctions the scheme presented to it than it should follow that the date of amalgamation/date of transfer is the dates spe....
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....order dated 04.12.2015 approved the Scheme of Arrangement without making any such changes to the appointed date specified therein. Here it is pertinent to refer to the content of Scheme of Arrangement which was approved and sanctioned by the High Court of Karnataka vide its order dated 04.12.2015 the relevant extracts of the Scheme of Arrangement which are reproduced here in below: Clause 1.3: "Appointed Date" means the commencement of business on April 1, 2014 or such other date as may be approved by the Hon'ble High Court of Karnataka. Clause 3: Demerger Clause 3.1: Transfer and Vesting of Demerged Undertaking Clause 3.1.1: Upon this Scheme becoming effective from the Appointed Date and subject to the provisions of this Scheme, including in relation to the mode of transfer and vesting, all the property and assets, both movable and immovable, tangible and intangible, investments, rights, title and interest comprised in the Demerged Undertaking shall be transferred, pursuant to Sec.394 of the Act and without any further act or deed, to and vested in the Resultant Company as a going concern in accordance with Sec 2(19AA) of the Income Tax Act, 1961, so as to become, as a....
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....whether before the Appointed Date or after the Appointed Date) in respect of the Demerged Undertaking prior to the Effective Date for any tax liability that arises after the Appointed Date shall be treated as, and deemed to be, tax paid by the Resultant Company and credit in respect thereof shall be given to the Resultant Company accordingly. 3.4.2: From the Effective Date, each of the Resultant Company and/or the Demerged Company may revise, if such company considers it necessary, its income tax returns to claim refunds or credits pursuant to the provisions of this Scheme. From the Effective Date, all taxes, cess or duties payable by, or on behalf of, the Demerged Company pertaining to the Demerged Undertaking from the Appointed Date onwards including all or any refunds and claims, and including the right of carry forward of accumulated losses or unabsorbed depreciation and right to claim minimum alternate tax credit, if any, of the Demerged Company pertaining to the Demerged Undertaking, shall, for all purposes, be treated as the tax, cess, duty, liabilities or refunds, claims, accumulated losses or unabsorbed depreciation and tax credit of the Resultant Company. 3.4.3: From ....
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....il the effective date by demerged company will be in trust for the resultant company. Further, we find that the Scheme of Arrangement is to become operative from the appointed date from which date onwards, the demerged undertaking of MHSPL/demerged company and MHEPL/resulting company shall constitute a single identity, in law. Further, we find that this issue has been settled by the Hon'ble Apex Court in the case of Marshall Sons & Co. (India) Ltd. cited (supra) wherein the Hon'ble Apex Court has held as under: "14. Every scheme of amalgamation has to necessarily provide a date with effect from which the 'amalgamation/transfer shall take place. The scheme concerned herein does so provide viz. 1.1.1982. It is true that while sanctioning the scheme, it is open to the Court to modify the said date and prescribe such date of amalgamation/transfer as it thinks appropriate in the facts and circumstances of the case. If the Court so specifies a date, there is little doubt that such date would be the date of amalgamation/date of transfer. But where the Court does not prescribe any specific date but merely sanctions the scheme presented to it as has happened in this case it should fol....
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....d by the CESTAT, Delhi in the case of Usha International Ltd vs. Commissioner of Service tax wherein identical issue was involved and the Division Bench of the Tribunal after considering the various decisions including the decision of the Apex Court has held as under: "we find that in the case of CST vs. ITC Hotels Ltd. (supra), CESTAT also applied the ratio of aforesaid judgment of Supreme Court holding that the High Court allowed the amalgamation of two companies with the parent company with effect from 01.04.2004 is the appointed date as per amalgamation Scheme and therefore 01.04.2004 is required to be taken as the date of amalgamation and not the date on which entire formalities were completed and the service provided by assessee with effect from 01.04.2004 is to be considered as provided to self, in which case, no service tax liability would arise against them. 7. In the light of the foregoing binding precedents there remains no scope for any debate that the date of amalgamation in the present case is to be held to be 01.04.2007 and not 20.06.2008. Obvious consequence of this is that the service rendered during the impugned period (01.04.2007 to 31.03.2008) became service....