TaxTMI 
TaxTMI 
2026 (6) TMI 1351
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....-existent entity, viz., M/s. Kanakia Supremo Construction Private Limited ("KSCPL" for short). 2. The facts and circumstances of the case, giving rise to the filing of this Writ Petition, in a nut-shell, as evident from the material on record, are as follows:- (a) KSCPL was a company registered under the Companies Act, 1956. Based on the order dated 29th November, 2016, passed by the Bombay High Court approving the scheme of amalgamation of KSCPL and another company, i.e., Kanakia King Style Construction Private Limited, merged with the Writ Petitioner, viz., Kanakia Spaces Realty Private Limited (for short "KSRPL"), which is also a company registered under the Companies Act, 1956. . The appointed dated of the merger under the scheme of amalgamation was 1st April, 2015. Consequently, KSCPL stood dissolved and its name was struck off from the records of Registrar of Companies ("RoC"). As per the projection made in the Writ Petition, KSCPL has discharged its service tax liability on the construction services provided by it to M/s. New Monarch Builders & Contractors, whereby, around 1000 slum dwellers were rehabilitated in the buildings constructed under the Slum Redevelop....
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....paid by KSCPL along with the order dated 17th February, 2020, cancelling the GST Registration. Notwithstanding the same, on 21st May, 2025, the DRC-01A form was issued by Respondent No.4 under Section 74 of the CGST Act, in the name of KSCPL demanding payment of GST liability along with interest. On 28th May, 2025, the petitioner submitted reply to the said notice denying and disputing the tax liability while informing the Department that KSCPL has ceased to exist and therefore, the proceedings ought to be in the name of the Petitioner company. However, by ignoring the same, show cause notice dated 25th June, 2025, was issued in the name of KSCPL under Section 74 of the CGST Act, calling upon it to show cause as to why, GST amount of Rs.44,78,61,113/- along with interest and penalty of appropriate amount, should not be demanded/ recovered from it. 7. Assailing the notice dated 25th June, 2025, the Writ Petitioner had instituted Writ Petition (L) No. 25819 of 2025 before this Court. However, since no interim order was passed in that proceeding, the Petitioner filed reply to the show cause notice denying its liability and once again asserting that the proceedings against KSCPL wer....
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....gued that the Petitioner's case is squarely covered by the aforesaid decisions of this Court wherein, it has been categorically held that show cause notice and consequent order issued under the GST law against an amalgamating company after it had ceased to exist, upon merger, would be void ab initio. The learned Senior Counsel, therefore, submits that the show cause notice dated 25th June, 2025 as well as the impugned Order-in-Original dated 31st December, 2025, are NON-EST in the eyes of law and hence, are liable to be set aside and the Writ Petition be allowed on such count alone. 12. Responding to the above submissions, Mr. S. Chandrashekhar, learned Counsel appearing for the Respondents, submits that although the factum of merger of KSCPL with the Writ Petitioner is not in dispute, yet, in view of Section 85 of the CGST Act, the recourse adopted in the present case would be permissible in the eyes of law. According to Mr. Chandrashekhar, since KSCPL had defaulted in discharging its liability, hence, by invoking powers under Sections 74 read with 85 of the GST Act, the Authority would be entitled to recover any such unpaid dues even after the merger of the transferring compan....
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....ompanies shall be treated as distinct companies for the period up to the date of the said order and the registration certificates of the said companies shall be cancelled with effect from the date of the said order." 16. Taking note of the aforementioned decisions and Section 87, another Co-ordinate Bench of this Court, in the case of Vodafone Idea Ltd. (supra), had interfered with similar order based on show notice issued to a non-existent amalgamating company, by observing that the provision of Section 87 of the CGST Act are only in respect of the intervening period from the date on which the order takes effect, till the date of the order and the same in no way, affects or give the Department the authority to issue show cause notice on a non-existent entity post merger/ amalgamation. It was further held that the show cause notice issued to a non-existent entity itself would be without jurisdiction and, therefore, the proceedings would stand vitiated and rendered void ab initio as has been held in the case of Reliance Industries Limited vs. P. L. Roongta (supra). The observations made in Vodafone Idea Ltd. (supra) on the question of applicability of Section 87, made in paragrap....