2022 (6) TMI 425 - HC - VAT and Sales Tax

Validity of assessment order - all the three authorities were of the view that no reconciliation statement has been produced, books of accounts have not been produced and therefore, the assessment was completed is in the nature of best judgment assessment - HELD THAT - Partially the appellant has to be blamed for the present position. The transferor company stood amalgamated with the appellant with effect from 1st November, 2007 though the scheme of amalgamation was approved by this Court on 26th June, 2009. The period for which the assessment has been made, which is the 4th quarter ending 2009 is obviously much after the order of this Court approving the scheme of amalgamation dated 26th June, 2009. Be that as it may, by operation of law, the transferor company, namely, M/s. Metco Group Engineers Pvt. Ltd. loses its identity on and after 1st November, 2007 and whatever the liabilities, which are existing as on the said date has to be borne / defended by the appellant, who is the transferee company - the proper course the appellant should have adopted is to get itself substituted in the place of the transferor company, produce all the documents and details in support of its claim and thereafter contest the proposal made by the assessing officer and take order on merits. However, this course having not been adopted, it is only the appellant, who has to be held responsible for the present situation. The matter can be remanded to the lower authorities for fresh considerations - writ appeal allowed.

Summary

Issues:
Appeal against assessment order - Challenge to concurrent findings of lower authorities - Proper assessment in case of company amalgamation.

Analysis:
The appeal was filed against an assessment order dated 20th December, 2011, challenged by the appellant, which was upheld by the appellate and revisional authorities. The court noted that the appellant, a transferee company, had amalgamated with the transferor company in 2009. The appellant contended that the assessment should not have been in the name of the transferor company post the amalgamation. However, the authorities found the assessment valid due to lack of reconciliation statements and accounts. The court observed that the appellant should have substituted itself in place of the transferor company to contest the assessment properly.

The court held that the transferor company lost its identity post the amalgamation, and the liabilities had to be borne by the appellant. It was noted that the appellant failed to follow the proper procedure to contest the assessment, leading to the current situation. The court emphasized that lawful taxes must be paid, and the State should be able to recover them. Considering these factors, the matter was remanded to the lower authorities for fresh consideration.

The writ appeal was allowed, and the orders of the revisional and appellate authorities were set aside. The matter was remanded to the appellate authority for fresh consideration. The appellant was directed to file a petition for substitution within 10 days. Once substituted, the appellant had to produce all necessary documents for assessment. Failure to comply would result in dismissal of the appeal without further reference to the court. The court clarified that the order applied to the assessment period of the 4th quarter ending 2009 as mentioned in the revisional authority's order. No costs were awarded, and urgent copies of the order were to be provided to the parties upon compliance with legal formalities.