Tax adjudication against a non-existent amalgamated company cannot stand.

The petitioner challenged a show-cause notice and adjudication order dated 30 January 2024 concerning service tax for October 2016 to March 2017.

The notice and order were issued in the name of ISS Integrated Facility Services India Private Limited, which the petitioner said had amalgamated with it under a scheme approved by the Bombay High Court.

The petitioner asserted that proceedings against the transferor, a non-existent company, were invalid; the CGST authorities disputed this, relying, among other matters, on the transferor’s active registration, alleged failure to surrender it or notify the authorities of the amalgamation, and the availability of a statutory appeal.

Whether a show-cause notice and adjudication order issued in the name of a transferor company that had ceased to exist following amalgamation could be sustained in law.

Whether the writ petition warranted consideration despite the respondents’ objection that an alternative statutory appeal was available.

The Court relied on Pr. Commissioner of Income Tax v. Maruti Suzuki India Ltd., which holds that where the authority has been informed that an amalgamating company has ceased to exist, issuing a jurisdictional notice in that company’s name is fundamentally inconsistent with its legal status; participation in proceedings cannot validate that defect.

It also considered Kamala Muthiah v. Assistant Commissioner of Income Tax, applying the principle that proceedings cannot be initiated against a company dissolved through amalgamation or demerger.

The respondents relied on Rules 4(7) and 4(8) of the Service Tax Rules, 1994, which require an assessee ceasing to provide taxable services to surrender its registration and provide for cancellation after outstanding dues are addressed.

The Court also considered HCL Infosystems Ltd. v. Commissioner of State Tax, cited by the respondents.

The Court found that the petitioner had made out a prima facie case that the proceedings were directed against a non-existent entity, engaging the principle in Maruti Suzuki.

At the same time, the respondents raised factual and legal matters requiring examination, including the transferor’s registration status, whether the Kolkata establishment was covered by the scheme, whether registration had been surrendered, and the alleged tax liability.

Rather than finally resolving those matters or deciding the merits, the Court quashed the adjudication order and directed the petitioner to place the relevant material before the authority through a comprehensive representation.

It directed the petitioner to submit a detailed representation, with supporting documents and relevant statutory provisions, within four weeks; the authority must decide it by a reasoned order after granting a personal hearing, within four weeks of receipt, and communicate the decision within the following week.

The authority was directed to decide independently, and the Court expressly left the merits open.