Facts of the Case:

In this case, the matter arose out of GST audit and assessment proceedings initiated against Tata Capital Financial Services Limited, a subsidiary of Tata Capital Limited. The subsidiary company was subsequently dissolved pursuant to a scheme of amalgamation approved by the National Company Law Tribunal (NCLT) with retrospective effect from 1 April 2023. Under the approved scheme, all assets, liabilities, rights, and obligations of the dissolved entity stood transferred to and vested in the transferee company, i.e., Tata Capital Limited.

Prior to the amalgamation, GST audit proceedings had already been initiated against the subsidiary company. However, even after the effective date of amalgamation and despite the department being duly informed about the dissolution of the subsidiary, the GST authorities continued the proceedings in the name of the dissolved entity.

Subsequently, an assessment order was passed against the non-existent company. Aggrieved by this action, the petitioner approached the Andhra Pradesh High Court contending that the entire proceedings were void as they were conducted against a non-existent legal entity.

Issue:

Whether GST proceedings, including assessment orders, initiated or continued against a dissolved/non-existent company post-amalgamation are legally sustainable, or whether such proceedings are void for lack of jurisdiction.

Held That:

The High Court held that any proceedings initiated or continued against a non-existent or dissolved company are void ab initio and suffer from a fundamental jurisdictional defect.

It emphasized that once a scheme of amalgamation takes effect and the transferor company stands dissolved, it ceases to exist in the eyes of law, and therefore, no proceedings can be validly continued in its name.

The Court rejected the contention of the GST department that such a defect was merely procedural and curable, holding that the issue strikes at the root of jurisdiction and renders the entire proceedings non est.

The Court clarified that although the liabilities of the dissolved company do not extinguish and continue to be enforceable against the transferee company, such enforcement must be carried out through proceedings initiated or continued in the correct legal name of the transferee entity. Referring to Section 87 of the CGST Act, the Court observed that the provision merely safeguards recovery of tax dues and ensures continuity of liability, but it does not validate or cure proceedings conducted against a non-existent entity.

Accordingly, the Court set aside the impugned assessment order passed against the dissolved company and allowed the writ petition, granting liberty to the department to proceed afresh in accordance with law against the appropriate entity.

Case Name: Tata Capital Limited vs. The Union of India dated 03.03.2026