GST Liability in case of Amalgamation or merger of companies
Section 109 of Model GST law of india cover liability in case of amalgamation / merger of companies
With effect from the date of order of merger or amalgamation of two or more companies, the liability to pay tax, interest and penalty for the period thereafter shall be of entity which emerges after such merger or amalgamation, as the case may be.
Mergers and amalgamation of companies are governed by section 232 to 234 of the Companies Act, 2013.
When two or more companies are amalgamated or merged by the order of court or of Tribunal or of the Central Government 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 and/or services to or from each other during the period commencing on the date from which the order takes effect till the date of the order, then such transactions of supply and receipt shall be included in the turnover of supply or receipt of the respective companies and shall be liable to tax accordingly. Thus, till the date of order of merger or amalgamation is pronounced, companies under the scheme shall be treated as distinct companies and shall be liable to discharge respective tax liabilities.
In case of merger and amalgamation, the scheme may fix an ‘appointed date’ for such merger or amalgamation and the Court / Tribunal order may be on a different date. The actual date of order and effective date may not be the same. The two or more companies 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, where necessary, with effect from the date of the said order.
Chapter XXII of the Model GST Law contains Chapter XXII comprising of sections 108 to 115 which deal with liability to pay GST in eight special cases as follows :
Section
| Liability |
108 | Liability in case of transfer of business |
109 | Liability in case of amalgamation / merger of companies |
110 | Liability in case of company in liquidation |
111 | Liability of partners of firm to pay tax |
112 | Liability of guardians, trustees etc |
113 | Liability of Court of Wards etc. |
114 | Special provision regarding liability to pay tax in certain cases (death, discontinued business, hindu undivided family or association of persons, on partition, dissolution of firm, termination of guardianship or trust etc). |
115 | Liability in other cases (discontinued business of HUF, firm, AOP; change in constitution of firm or AOP etc.) |
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