TaxTMI 
TaxTMI 
2026 (5) TMI 631
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....r going into the validity and legality thereof be pleased to quash and set aside the impugned Order bearing Reference No. ZD270424057770B dated 26.04.2024 passed by the Respondent No. 3 (Exhibit "A"); (b) this Hon'ble Court be pleased to issue a Writ of Prohibition or a writ in the nature of Prohibition or any other appropriate writ, order or direction under Article 226 of the Constitution of India prohibiting the Respondents by themselves, their subordinate, servants and agents from acting upon or taking any further proceedings in pursuance of and/or in furtherance of the impugned Order bearing Reference No. ZD270424057770B dated 26 April 2024 passed by the Respondent No. 3 (Exhibit "A")." 3. The primary contention as urged on behalf of the petitioner is that the impugned order dated 26 April 2024 has been issued in the name of a non-existing entity, namely, Capital First Limited ("CFL"), for such reason, considering the well settled principles of law as laid down in several decisions, and more particularly, in the case of Principal Commissioner of Income Tax, New Delhi Vs. Maruti Suzuki India Limited [2019] 416 ITR 613 (SC), and recently followed by this Court in the ....
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....nded that despite repeated submissions, Respondent No. 3 continued to seek additional documents alleging insufficiency in the earlier submissions. On 28 November 2023, the Petitioner submitted an issue-wise reply and requested the Respondents either to initiate the audit proceedings against the amalgamated entity or alternatively transfer the proceedings to the jurisdictional officer of the amalgamated entity. 9. Respondent No. 3, however, proceeded to issue an Audit Report dated 8 December 2023 in Form GST ADT-02 alleging eighteen discrepancies/observations against CFL. This was followed by a notice dated 17 December 2023 in Form GST DRC-01A intimating tax liability. Respondent No. 3 also fixed a personal hearing on 19 December 2023, which according to the Petitioner was duly attended, and a detailed reply along with supporting documents came to be submitted. 10. In the aforesaid backdrop a Show Cause Notice dated 30 December 2023 in Form GST DRC-01 came to be issued alleging seventeen parameters against CFL. The Petitioner, by its detailed reply dated 29 January 2024, reiterated that CFL itself was no longer in existence due to its amalgamation with the Petitioner. The auth....
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...., has rightly placed reliance on the decision of this Court in Vodafone Idea Limited (supra), in our opinion, are squarely applicable, insofar as, the present proceedings are concerned wherein, considering the decision in Maruti Suzuki (supra), other relevant decisions, as also considering the provisions of Section 87, the Court read as under:- "8. The Petitioner had also contended that in regard to the legal effect brought about by the order passed by the NCLT sanctioning the scheme of amalgamation, the amalgamating entities ceased to exist upon such merger. Thus, the present case would squarely be governed by the principles of law laid down by the Supreme Court in Principal Commissioner of Income Tax, New Delhi v. Maruti Suzuki India Ltd. (supra). The relevant paragraphs of the said decision read thus: 19. While assessing the merits of the rival submissions, it is necessary at the outset to advert to certain significant facets of the present case: (i) Firstly, the income which is sought to be subjected to the charge of tax for AY 2012-13 is the income of the erstwhile entity (SPIL) prior to amalgamation. This is on account of a transfer pricing addition....
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....al, Chennai, approved the scheme of amalgamation on 12 December 2018, whereby, the amalgamation of CFL, Capital First Home Finance Limited and Capital first Securities Limited ("three companies") with the petitioners stood approved. This would cannot stop at this as an application for cancellation of registration of CFL was also filed subsequently and order for cancellation was passed on 21 January 2019 also on 14 June 2019. Thus, clearly the legal existence of the company which had stood amalgamated under the orders of the NCLT thereon be recognized. Considering the principles of law as laid down by the Supreme Court in Maruti Suzuki India Limited (supra), it also appears to us that the respondents fully aware the fact that CFL is no longer in existence, and completely discarding the position on record which came to be issued leading to the passing of the impugned order. Also in our opinion, there is clearly a misplaced reliance on the provisions of Section 87 of the CGST Act. In the very context in hand, Mr. Prakash Shah has rightly placed reliance on the decision of this Court in Vodafone Idea Limited (supra), wherein, considering the decision in Maruti Suzuki (supra) a....
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....supra)." 9. A Coordinate Bench of this Court in Reliance Industries Limited v. P. L. Roongta (supra), as noted above, has also categorically held that despite the Assessing Officer having been informed that the amalgamating company had ceased to exist pursuant to the scheme of amalgamation, any proceedings initiated against such a non-existent entity are void ab initio. 10. We are further of the view that the provisions of Section 87 of the CGST Act are not applicable to the facts of the case, inasmuch as the conditions/ingredients stipulated therein are not attracted/applicable to the facts of the present case. For ease of reference, the provisions of Section 87 of the CGST Act are reproduced below:- 87. Liability in case of amalgamation or merger of companies.- (1) When two or more companies are amalgamated or merged in pursuance of an order of court or of Tribunal or otherwise and the order is to take effect from a date earlier to the date of the order and any two or more of such companies have supplied or received any goods or services or both to or from each other during the period commencing on the date from which the order takes effect till the dat....
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....se notice dated 1st August 2024. The show-cause notice itself having been issued without jurisdiction, the proceedings stand vitiated and are rendered void ab initio, as held in Reliance Industries Limited v. P. L. Roongta (supra). 14. We are in agreement with Mr. Shroff and also find support in the decision of the Delhi High Court in HCL Infosystems Ltd. v. Commissioner of State Tax and Another, wherein, while interpreting Section 87 of the CGST Act, the following observations were made:- "16. As is manifest from the above, Section 87 essentially seeks to preserve and identify the transactions which may have occurred between two or more companies which ultimately amalgamate and merge. In order to fix the liabilities that would accrue under the CGST Act and to avoid a contention being raised that the Amalgamating Company and transactions undertaken with it would no longer, be subject to tax, the Legislature, ex abundanti cautela, has come to place Section 87 on the statute book and which bids us to bear in mind that notwithstanding an order of amalgamation or a scheme of merger coming to be approved, for the purposes of the CGST Act, the two entities would be trea....