Bombay High Court Holds GST Proceedings Against Non-Existent Amalgamating Company Are Void Ab Initio

Background and Facts
The case arose from a challenge to an Order-in-Original dated 31st December 2025, issued by the Joint Commissioner, CGST & CX, confirming a substantial GST demand against M/s. Kanakia Supremo Construction Private Limited (KSCPL). KSCPL had merged with Kanakia Spaces Realty Private Limited (KSRPL) pursuant to a Bombay High Court order dated 29th November 2016, with the appointed date of merger being 1st April 2015. As a result, KSCPL ceased to exist and its name was struck off from the Registrar of Companies. Despite this, GST authorities issued show cause notices and the impugned order in the name of KSCPL, demanding GST dues, interest, and penalty.

Legal Issue
The central issue before the Court was whether proceedings initiated under the CGST Act, including show cause notices and orders, could be sustained when issued against a company that had ceased to exist due to amalgamation.

Submissions
The petitioner argued, relying on precedents including Reliance Industries Limited v. P. L. Roongta and Vodafone Idea Ltd. v. Union of India, that such proceedings are void ab initio when issued to a non-existent entity post-amalgamation. The respondents contended that under Section 85 of the CGST Act, the tax liability of the transferor company could be recovered from the transferee, and that the proceedings were permissible.

Court’s Reasoning
The Court examined the facts and noted that the authorities had been informed of the merger and dissolution of KSCPL prior to issuing the impugned notices and order. The Court referred to the Supreme Court’s decision in Principal Commissioner of Income Tax v. Maruti Suzuki India Ltd., which held that proceedings against a non-existent amalgamating company are void ab initio. The Bombay High Court’s own decisions in Reliance Industries and Vodafone Idea were also cited, reiterating that show cause notices and orders issued to non-existent entities post-merger are without jurisdiction.

The Court clarified the scope of Section 87 of the CGST Act, holding that it only applies to the period between the effective date and the date of the amalgamation order, and does not authorize proceedings against a non-existent entity after amalgamation.

Decision and Legal Principle
The Court held that any show cause notice or order issued to an amalgamating company after it has ceased to exist due to merger is without jurisdiction and void ab initio. Accordingly, the impugned Order-in-Original dated 31st December 2025 was set aside.

Clarification and Outcome
The Court expressly limited its decision to the procedural ground that the proceedings were initiated against a non-existent company, and did not address the merits of the underlying tax liability. It clarified that the authorities remain free to initiate fresh proceedings against the amalgamated entity, if otherwise permissible under law.

The writ petition was allowed and disposed of, with no order as to costs.