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2020 (8) TMI 42 - HC - VAT and Sales TaxAssessment in the name of merged company - Violation of Principles of Natural Justice - service of SCN - SCN was allegedly issued by the 1st respondent proposing to levy tax on turnover of ₹ 31,21,764/- allegedly for inter-State sales effected by MAPL, but the petitioner contends that it did not receive it - Levy of turnover tax - inter-State sales - HELD THAT - The impugned assessment order has been passed by the 1st respondent on 23.09.2020 with respect to the assessee, MAPL. But, MAPL had been merged with the petitioner, MEPL vide order dt.03.05.2017 of the NCLT, Hyderabad w.e.f. 01.04.2015. This fact had been informed by the petitioner by e-mail dt.26.11.2019 to the 1st respondent enclosing copy of the order of the NCLT - the 1st respondent, who is the Assessing Officer of the MAPL, ought to have dropped further proceedings since the assessee was no longer in existence. Also, there is no date of the show-cause said to have been given to MAPL mentioned in the impugned order, and the petitioner denies having received it and also the reminder notice dt.06.03.2020 mentioned in the impugned order. Thus, there is also a violation of principles of natural justice. The turnover of MAPL, the amalgamated entity ought to be assessed in the name of the petitioner with whom it is merged. The assessment of the petitioner is admittedly alive before the 2nd respondent - the impugned Assessment Order passed by the 1st respondent in respect of MAPL is set aside - the 2nd respondent, who is the assessing authority of petitioner with whom MAPL has been merged is permitted to issue a show-cause notice to the petitioner in respect of turnover of the MAPL for the period April, 2015 to March, 2016 - petition allowed.
Issues:
Assessment order challenge for tax period April 2015 to March 2016 under Central Sales Tax Act; Amalgamation of two companies and subsequent tax liability; Allegations of lack of response to show-cause notices and violation of natural justice principles; Jurisdictional authority for assessment post-amalgamation; Bar of limitation under Central Sales Tax Rules. Analysis: The petitioner, M/s. Mallemala Entertainments Pvt. Ltd. (MEPL), challenged Assessment Order No.43602 dated 29.03.2020 by the 1st respondent regarding the tax period from April 2015 to March 2016 under the Central Sales Tax Act. MEPL amalgamated with M/s. Mallemala Agro Pvt. Ltd. (MAPL), a dealer in poultry products, effective from 01.04.2015 as per NCLT order. MEPL contended that MAPL had nil turnover under Central Sales Tax Act due to exempt goods sales and disputed receiving show-cause notice proposing tax on inter-State sales. MEPL argued that the assessment order lacked natural justice principles compliance and was void post-amalgamation. The Special Counsel for Commercial Taxes acknowledged that the 1st respondent erred in passing the assessment order for MAPL post-amalgamation with MEPL. The Court noted MEPL's communication enclosing NCLT order informing the 1st respondent of the amalgamation. The Court held that the 1st respondent should have ceased proceedings as MAPL ceased to exist post-amalgamation. The absence of show-cause notice date and denial of receipt by MEPL raised natural justice violation concerns. The Court ruled in favor of the petitioner, setting aside the impugned Assessment Order for MAPL. The 2nd respondent, the assessing authority for MEPL, was directed to issue a show-cause notice to MEPL for MAPL's turnover during April 2015 to March 2016. MEPL was granted six weeks to respond, including raising the bar of limitation under Central Sales Tax Rules, with a personal hearing to be provided. The 1st respondent was instructed to pass a reasoned order in accordance with the law post the hearing, ensuring communication to the petitioner. The Writ Petition was allowed with no costs, and related pending petitions were closed. In conclusion, the judgment rectified the assessment order error post-company amalgamation, emphasizing compliance with natural justice principles and proper jurisdictional authority for assessment. The ruling safeguarded the petitioner's rights and outlined a fair process for reassessment, ensuring due procedure and legal standards adherence.
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