Delhi High Court: Quashing Of GST Orders Against Amalgamated Entities Subject To Full Pre-Deposit

This ruling (delivered in March 2026) highlights the interplay between corporate restructuring (NCLT schemes) and GST liability. It establishes that while a non-existent entity cannot be pursued, the successor (amalgamated) entity must still prove its case, often requiring a “pre-deposit” to restore its right to a fair hearing.

The Legal Issue

Is a GST assessment order valid if issued in the name of a company that has already been amalgamated into another entity via an NCLT order and whose registration has been cancelled?

Facts of the Case

The Amalgamation: The petitioner (the erstwhile company) underwent a merger/amalgamation sanctioned by the National Company Law Tribunal (NCLT).
The Cancellation: Post-amalgamation, a “No Due Certificate” was issued, and the GST registration of the predecessor company was cancelled.
The Default: A Show Cause Notice (SCN) was issued and uploaded to the GST portal. However, because the registration was cancelled/inactive, the petitioner failed to notice it and did not file a response.
The Order: An Order-in-Original was passed ex-parte (without the petitioner’s participation) under Section 73 (cases not involving fraud/suppression).
The Petitioner’s Offer: The petitioner agreed to discharge the entire liability under the order if they were granted a fresh opportunity to be heard and their reply was considered.

The Decision: Remand with Conditions

The Court ruled in favour of the assessee/matter remanded, but with a significant financial condition:

Setting Aside the Order: The ex-parte order was set aside because it violated the principles of natural justice and was issued against an entity whose registration was cancelled post-amalgamation.
The Pre-condition (Pre-deposit): The Court ordered the petitioner to deposit the entire amount mentioned in the Order-in-Original. This is more stringent than the standard 10% pre-deposit usually required for appeals.
Restoration of Hearing: Upon proof of deposit, the respondent (GST Department) was directed to evaluate the petitioner’s claim/reply against the SCN and pass a fresh order after providing an opportunity for a personal hearing.

Key Takeaways for Amalgamated Entities

Notify the Portal: Ensure the GST Department is formally notified of the NCLT order and the “Appointed Date” of the merger. Amalgamation does not automatically stop pending notices if the portal is not updated.
Registration Cancellation is not Liability Immunity: Under Section 29, the cancellation of registration does not absolve the entity (or its successor) from paying taxes, interest, or penalties due for the period prior to cancellation.
Successor Liability: The amalgamated company (the “survivor”) is legally responsible for the tax liabilities of the transferor company.
Conditional Relief: If you miss a notice due to portal issues post-merger, the Courts may help you, but they may require a significant “security deposit” to ensure the Revenue’s interests are protected while you fight the case on merits.

Summary of Post-Amalgamation Checklist

Update ROC & GST: File Form GST REG-16 for cancellation and ensure the successor entity adds the predecessor’s sites as “additional places of business.”
Transfer ITC: File Form GST ITC-02 to transfer unutilized credit.
Monitor the “Old” GSTIN: Even after cancellation, periodically check the portal for notices related to previous financial years to avoid ex-parte orders.

HIGH COURT OF DELHI

Chemistry Design (P.) Ltd.

Assistant Commissioner, CECGST^*

NITIN WASUDEO SAMBRE and Ajay Digpaul, JJ.

W.P. (C) No. 2144 of 2026
CM APPL. No. 10458 of 2026 (Exemption)

FEBRUARY 16, 2026

Rohan Thawani and Ms. Maryam Junaid, Advs. for the Petitioner. R. Ramachandran, Sr. Standing Counsel for the Respondent.

ORDER

1. Exemption allowed subject to all just exceptions.

2. The application stands disposed of.

W.P.(C) 2144/2026 & CM APPL. 10457/2026

3. A show-cause notice dated 26^th June, 2025 was served on the petitioner through an email and also uploaded on the portal which the petitioner has failed to notice and as such there was failure to submit response.

4. As a sequel of above, an order came to be passed in December, 2025 without bearing any date thereon, which is subject matter of challenge in the present petition.

5. According to the learned counsel for the petitioner, post the amalgamation scheme by the NCLT, there was a no due certificate issued in favour of the erstwhile company which underwent amalgamation, further resulting into cancellation of the registration.

6. The petitioner submits that once there was a no due certificate, there is no question of there being liability fastened pursuant to the show-cause notice or Order-in-Original.

7. The counsel for the respondent submits that there was sufficient notice to the petitioner not only through uploading the same on the portal but also through the email and as such the obligation under Section 73 of the CGST Act, 2017 was duly discharged.

8. We have considered the aforesaid submissions.

9. The only point which warrants consideration is whether the proceedings should have been conducted against the petitioner particularly when there was no due certificate issued and cancellation of registration also.

10. In response to the Court’s query, the learned counsel for the petitioner submits that the entire liability under the order impugned shall be discharged by depositing the amount with the authority which has passed the impugned order within a period of two weeks from today, provided that the petitioner should be offered an opportunity of hearing after considering its reply. The learned counsel for the petitioner further informs that within two weeks along with the deposit not only the reply to the show-cause notice will be submitted but also written submissions shall also be made before the said authority.

11. Accepting the said statement coming from the learned counsel for the petitioner as an undertaking to this Court, we deem it appropriate to allow the present petition. We hereby, quash and set aside the impugned Order-in-Original passed by the respondent authority which is produced at Annexure P-2 to the petition dated December, 2025.

12. Subject to deposit of the entire amount under the Order-in-Original which is quashed and set aside, within a period of two weeks from today accompanied with the reply to the show-cause notice so also, the written submissions on the part of the petitioner, the respondent shall proceed to evaluate the claim of the petitioner qua the show-cause notice and pass a fresh order after giving an opportunity of hearing to the petitioner.

13. Let the order be communicated to the petitioner within a period of three months from today.

14. The petition as such stands partly allowed in the above terms.

15. Needless to clarify that in case if the order is adverse to the interest of the petitioner, the amount deposited shall be adjusted against the liability and in case if the show-cause notice is discharged by the respondent, the amount be refunded forthwith to the petitioner.