Show Cause Notice and Orders Issued Against Non-Existent Amalgamated Entity Are Void Ab Initio

Show Cause Notice and Orders Issued Against Non-Existent Amalgamated Entity Are Void Ab Initio

Show Cause Notice and Orders Issued Against Non-Existent Amalgamated Entity Are Void Ab Initio

• The assessee is an amalgamated telecom company formed through an NCLT-approved merger of VMSL and Vodafone India with Idea Cellular.
• Due intimation regarding the amalgamation and corporate restructuring was duly submitted to the GST authorities.
• Upon NCLT approval of the merger, the amalgamating entities (including VMSL) legally ceased to exist.
• Post-merger, the GST department issued an SCN and passed consequential demand orders in the name of the non-existent amalgamating entity (VMSL).
• The High Court held that Section 87 applies only to the intervening period up to merger approval, requiring cancellation of old registrations, and does not permit initiating or continuing proceedings against a non-existent entity.
• The High Court declared the SCN and orders void ab initio and set them aside.
• The Revenue filed a Special Leave Petition (SLP) before the Supreme Court challenging the High Court’s ruling.

• The Supreme Court declined to interfere with the well-reasoned order of the High Court [Para 2].
• Proceedings initiated or continued in the name of a non-existent amalgamating company post-merger lack statutory jurisdiction [Para 2].
• The Special Leave Petition filed by the Revenue was accordingly dismissed [Para 3].

• Jurisdictional Defect: Issuing show cause notices or assessment orders against a non-existent entity post-amalgamation is a fundamental jurisdictional defect that renders the proceedings void ab initio.
• Scope of Section 87: Section 87 of the CGST Act governs liability during the transition window up to the merger approval date; it does not authorize post-merger proceedings in the name of dissolved corporate entities.
• Effect of Intimation: Once the Tax Department is formally notified of an NCLT-approved merger, it is legally bound to initiate any subsequent proceedings solely against the surviving amalgamated entity.