SCN and demand under GST invalid when issued to non-existent amalgamating company post-dissolution { Kanakia Spaces Realty (P.) Ltd. vs. Union of India [2026] 187 taxmann.com 1055 (Bombay)}
Facts
- The transferor company merged with the petitioner under an approved amalgamation scheme and stood dissolved in 2015.
- The tax authorities were informed about the amalgamation and the transferor company’s GST registration was subsequently cancelled.
- Despite this, the department issued a pre-show cause notice (DRC-01A), a show cause notice under Section 74 and later passed an Order-in-Original in the name of the dissolved transferor company, demanding GST.
- The petitioner challenged the proceedings on the ground that they were initiated against a non-existent entity.
Issue
Whether a show cause notice and demand order under Section 74 of the GST Act can validly be issued against an amalgamating company that has ceased to exist following its merger and dissolution.
Held
The Bombay High Court held that a show cause notice and demand order issued to a non-existent company after its dissolution are without jurisdiction and void ab initio. Section 87 does not authorize initiation of proceedings against a dissolved entity. Accordingly, the entire proceedings, including the Order-in-Original, were quashed. However, the Court left it open to the department to initiate proceedings against the amalgamated company, if otherwise permissible in law.
