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TMI Blog2020 (2) TMI 1256X X X X Extracts X X X X X X X X Extracts X X X X ..... ment clearly shows that all the present assets or receivables of the demerged undertaking on or after the appointed date shall be the assets and receivables of the resultant company and the treatment of the taxes, levies, cess etc., paid by the demerged company with regard to the demerged undertaking shall, after appointed date but prior to the effective date i.e., 11.03.2016 be treated and deemed as the tax paid by the resultant company - Further, the conduct of the business with effect from the appointed date until the effective date by demerged company will be in trust for the resultant company. The Hon ble Apex Court has observed in the case of MARSHALL SONS AND COMPANY (INDIA) LIMITED VERSUS INCOME-TAX OFFICER [ 1996 (11) TMI 6 - SUPREME COURT] that it is the date of Amalgamation as presented in the scheme which has to be taken as the transfer date in as much as the Courts approval may be given later. Further the Hon ble Supreme Court has observed that the scheme of amalgamation would not take effect from the date of order sanctioning the scheme but would laid back to the transfer date as presented in the amalgamation scheme. The business carried out by the subsidiary co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... consultancy services from MHSPL on which applicable service tax was charged by MHSPL from the appellant and was duly paid to the government until March 2016. Thereafter the MHSPL proposed to enter into a Scheme of Arrangement with the MHEPL for the transfer of their Core Health Care Business sector comprising of undertakings, business activities and operations to the appellant/MHEPL). The said Scheme of Arrangement proposed to be entered into was approved by the Board of Directors of MHSPL on 13.10.2014 where the Board has also resolved on the said date to file the necessary applications and petitions before the Hon ble Karnataka High Court for the purpose of approval and sanction. Similarly, the said Scheme of Arrangement was also approved by the Board of appellant (MHEPL) on 13.10.2014 itself and where the Board has also resolved on the said date to file the necessary applications and petitions before the Hon ble Karnataka High Court for the purpose of approval and sanction. 2.1. Thereafter, the Karnataka High Court vide sanction order dated 04.12.2015 approved the Scheme of Arrangement without making any such changes to the appointed date specified therein. After the order ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... roved Scheme of Arrangement where the appointed date and merger date is 01.04.2014 upon the scheme becoming effective. He further submitted that the impugned order has been passed without due consideration of the approved Scheme of Arrangement wherein it is provided that all the present assets or receivables of the demerged undertaking on or after the appointed date shall be the assets and receivables of the resultant company. He also submitted that in the approved Scheme of Arrangement it has been provided that the taxes paid by the demerged company shall, after the appointed date be treated and deemed as tax paid by the resultant company. He also submitted that the order passed by the High Court of Karnataka dated 04/12/2015 did not specify any such alternate appointment date than that of 01.04.2014. He further argued that the impugned order erroneously held that although the scheme becomes operative from the appointed date i.e., 01.04.2014, it is only effective from the effective date i.e., 11.03.2016 (on which the certified copy of the order of the High Court dated 04.12.2015 was filed before the ROC). 4.1 Learned counsel also took us through the various clauses of the Schem ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Court has held that after the Court so specifies the date, there is little doubt such date would be the date of amalgamation/date of transfer, where the court does not prescribe any specific date but merely sanctions the scheme presented to it than it should follow that the date of amalgamation/date of transfer is the dates specified in the scheme as the appointed date (which would be the transfer date). It cannot be otherwise. He further submitted that the said decision of the Hon ble Supreme Court in Marshall Sons Co. (India) Ltd has been consistently followed by the High Court and Tribunal in the following decisions: Usha International Ltd vs. Commissioner of Service Tax, New Delhi (2016) 67 Taxmann.com 360 (New Delhi-CESTAT) Commissioner of Service Tax, Delhi-I vs. ITC Hotels Ltd., (2011) 16 taxmann.com 54 (New Delhi-CESTAT) Khurana Engineering Ltd vs. Deputy Commissioner of Income Tax (OSD)-I (2013) 34 taxmann.com 261 (Gujarat) 5. On the other hand the learned AR defended the impugned order. He further submitted that the appellant are not entitled to refund because at the material point of time both the companies viz. the service provider and the servi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vable and immovable, tangible and intangible, investments, rights, title and interest comprised in the Demerged Undertaking shall be transferred, pursuant to Sec.394 of the Act and without any further act or deed, to and vested in the Resultant Company as a going concern in accordance with Sec 2(19AA) of the Income Tax Act, 1961, so as to become, as and from the Appointed Date, the property, estate, assets, investments, rights, titles and interest of the Resultant Company. Clause 3.1.2: The mode of vesting of the assets referred to in Clause 3.1.1. is as follows. Clause 3.1.3 : It is clarified that all assets and receivables whether contingent or otherwise of the Demerged Undertaking, as on the start of business on the Appointed Date, whether provided for or not in the books of accounts, and all other assets or receivables which may accrue or arise on or after the Appointed Date but which relate to the period up to the Appointed Date shall be the assets and receivables of the Resultant Company. Clause 3.2 : Transfer of Liabilities, Upon this Scheme becoming effective from the Appointed Date. Clause 3.2.6: All taxes, levies, cess etc. paid by the Demerged Compan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng the right of carry forward of accumulated losses or unabsorbed depreciation and right to claim minimum alternate tax credit, if any, of the Demerged Company pertaining to the Demerged Undertaking, shall, for all purposes, be treated as the tax, cess, duty, liabilities or refunds, claims, accumulated losses or unabsorbed depreciation and tax credit of the Resultant Company. 3.4.3 : From the Effective Date, each of the Resultant Company and/or Demerged Company may revise, if such company considers it necessary, its sales tax returns, excise and cenvat returns, service tax returns, other tax returns and restore input credit of service tax adjusted earlier or claim refunds or credits pursuant to the provisions of this Scheme. With effect from the Effective Date, the Resultant Company is expressly permitted to claim refunds or credits on account of service tax pertaining to the Demerged Undertaking, in accordance with the Service Tax Rules. 5.1 : With effect from the Appointed Date to and including the Effective Date, the Demerged Company shall be deemed to have been carrying on and shall carry on all its businesses and activities in respect of the Demerged Undertaking and s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... odify the said date and prescribe such date of amalgamation/transfer as it thinks appropriate in the facts and circumstances of the case. If the Court so specifies a date, there is little doubt that such date would be the date of amalgamation/date of transfer. But where the Court does not prescribe any specific date but merely sanctions the scheme presented to it as has happened in this case it should follow that the date of amalgamation/date of transfer is the date specified in the scheme as the transfer date. It cannot be otherwise. It must be remembered that before applying to the Court under Section 391(l), a scheme has to be framed and such scheme has to contain a date of amalgamation/transfer. The proceedings before the Court may take some time; indeed, they are bound to take some time because several steps provided by Sections 391 to 394-A and the relevant Rules have to be followed and complied with. During the period the proceedings are pending before the Court, both the amalgamating units, i.e. the Transferor Company and the Transferee Company may carry on business, as has happened in this case but normally provision is made for this aspect also in the scheme of amalgamati ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... idered as provided to self, in which case, no service tax liability would arise against them. 7. In the light of the foregoing binding precedents there remains no scope for any debate that the date of amalgamation in the present case is to be held to be 01.04.2007 and not 20.06.2008. Obvious consequence of this is that the service rendered during the impugned period (01.04.2007 to 31.03.2008) became service to self and consequently service tax paid during the said period became eligible for refund. Thus the refund of ₹ 71,74,496/-(as was initially sanctioned by the primary adjudicating authority) was clearly admissible to the appellant. 6.3. We also note that the Tribunal in the case of ITC Hotels Limited cited supra has also followed the Apex Court decision in the case of Marshall Sons and Co. (India) Ltd and has held in para 8 onwards: 8. We have considered the submissions made by both sides. There is no denial to the fact that in terms of the Hon ble High Court of Delhi and Kolkata s order for amalgamation, the appointed date is 01.04.2004. The period involved in the present appeal for claiming refund of service tax is from 01.04.2004 onward till September, ..... X X X X Extracts X X X X X X X X Extracts X X X X
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