2024 (7) TMI 1108 - HC - GST

Challenge to notices/endorsement in Form GST DRC-01 - issuance of notices to a non-existent entity - HELD THAT - Admittedly, as the notices/endorsement at Annexure-'A' are issued to a non-existent entity, the proceedings sought to be initiated by virtue of show cause notices/endorsement at Annexure-'A' in all the petitions are set aside. It is needless to state that the respondents are at liberty to pursue the proceedings against the appropriate entity regarding the subject matter of notices at Annexure-'A' as is permissible in law, as the petitions are disposed off on the premise that no proceedings could have been initiated against a non-existent Company. The petitions are disposed off.

Summary

Issues:
Challenging notices in Form GST DRC-01 issued to a non-existent entity post amalgamation.

Analysis:
The petitioner, M/s. Trelleborg India Private Limited, filed writ petitions challenging notices in Form GST DRC-01 issued for various tax periods to a non-existent entity, M/s. Trelleborg Sealing Solutions (India) Private Limited. The National Company Law Tribunal (NCLT) approved the Scheme of Amalgamation resulting in the creation of the new entity, M/s. Trelleborg India Private Limited. The liability was transferred to the Transferee Company post-amalgamation as per the NCLT order. An application for cancellation of registration of the amalgamated entity was made and approved, with the effective date of cancellation specified. Despite these developments, show cause notices were issued to the non-existent entity, leading to the writ petitions challenging the validity of such notices.

The legal position, as per the decision in Principal Commissioner of Income Tax v. Maruti Suzuki (India) Limited, states that once an amalgamating entity ceases to exist post-approved Scheme of Amalgamation, proceedings cannot continue against the non-existent company. This principle was reiterated in subsequent judgments, including one passed by the Court in another case. As the notices were issued to a non-existent entity, the Court set aside the proceedings initiated through these notices. The respondents are allowed to pursue proceedings against the appropriate entity concerning the subject matter of the notices, emphasizing that no proceedings can be initiated against a non-existent company. All contentions are left open for further legal action.

In conclusion, the Court disposed of the petitions, emphasizing the importance of legal proceedings being correctly directed towards existing entities post-amalgamation and highlighting the need for adherence to legal principles in such cases.