In a recent case, the Karnataka High Court has held that the goods and service tax (GST) proceedings cannot be initiated against a non-existent company and quashed the notice.
The notices in Form GST DRC-01 have been issued for various tax periods on the ground that notices have been issued to a non-existent entity, viz., M/s. Trelleborg Sealing Solutions (India) Private Limited is the petitioner.
In terms of the Scheme of Amalgamation approved by National Company Law Tribunal (NCLT) Bengaluru Bench, M/s. Trelleborg Sealing Solutions (India) Private Limited was amalgamated resulting in the creation of a new entity M/s. Trelleborg India Private Limited, which is the petitioner in terms of the order passed by NCLT, Bengaluru Bench.
After amalgamation of M/s. Trelleborg Sealing Solutions (India) Private Limited with the Transferee Company M/s. Trelleborg Industrial Products Private Limited, the new entity formed underwent a change of name and accordingly, the petitioner represents a new Company consequent to amalgamation as per the order passed by NCLT, Bengaluru Bench.
Sri Shamanth Naik, HCGP appearing for the respondents submitted that the liability stands transferred to the Transferee Company. After the approval of Scheme of Amalgamation by NCLT, an application for cancellation of registration of M/s. Trelleborg Sealing Solutions (India) Private Limited was made on 29.11.2021 and the final order came to be passed on 03.12.2021 in Form GST REG-19 and the effective date of cancellation of registration was stipulated as 29.11.2021.
Justice S Sunil Dutt Yadav observed that once an amalgamating entity ceases to exist upon approved Scheme of Amalgamation, the question of continuing the proceedings as regards the non-existent Company cannot be permitted.
As the notices/endorsement are issued to a non-existent entity, the Court set aside the same and allowed the petition.
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