Order Date – 2 November 2024

Parties: HCL INFOSYSTEMS LTD Vs COMMISSIONER OF STATE TAX & ANR

Facts –

• This writ petition impugns the Show Cause Notice dated 03 December 2023 as also a final order dated 27 April 2024 purporting to be under Section 73 of the Central Goods and Services Tax Act, 2017 and raising a demand in the name of “Digilife Distribution and Marketing Services Limited”.
• The Petitioner (Amalgamated Company), HCL Infosystems Ltd, formulated a Scheme of Arrangement which is approved by National Company Law Tribunal in term of its order of 10 August 2022 with Digilife Distribution and Marketing Services Limited (Amalgamating Company).
• Amalgamating Company moved an application for cancellation of its existing registration and the petitioner filed Form GST ITC-02 together with a certificate of a Chartered Accountant seeking transfer of the Input Tax Credit standing in the account of the Amalgamating Company to the petitioner.
• Despite, having clearly and in unequivocal terms informed and having apprised the respondents that Digilife Distribution and Marketing Services Limited could no longer be viewed as existing in law the respondent passed the order.

Issue –

• Whether the action of respondent to finalize order against Amalgamating Company is proper?

Order –

• The Court observed that the conclusion rendered by the Supreme Court in the case of Maruti Suzuki and which had on a construction of Section 292B of the IT Act held that a notice or order framed in respect of a non-existent entity would not be rectifiable in terms of that provision. The Court found that the CGST Act incorporates a provision which is pari materia to Section 292B and which is Section 160.
• Even the powers conferred by Section 160 upon the respondents under the CGST Act would not come to their rescue or enable them to salvage the notice as well as the final order which has come to be passed.
• Section 87 does not enabling the respondents to either continue to place a non-existent entity on notice or for that matter to pass an order of assessment referable to Section 73 against such an entity.
• In fact, in terms of Section 87, the liabilities of the non-existent company would in any case stand transposed to be borne by the amalgamated entity. This is, therefore, not a case where the Revenue would stand to lose or be deprived of their right to subject transactions to tax.
• Further the principles that had identified in International Hospital albeit in the context of the IT Act would equally apply to the CGST Act. Accordingly, the instant writ petition is allowed.