Case Law Details
Integra Garments & Textiles Ltd Vs Union of India (Madras High Court)
Madras High Court held that non-fulfilling obligation under advance license by the transferor doesn’t get extinguish on account of merger/ amalgamation. Such liability has to be discharged by the transferee company.
Facts- The petitioner has challenged the impugned show cause notice dated 28.08.2019 issued by the third respondent seeking to recover Customs duty on the imports made by the petitioner mainly contesting that the show cause notice issued in the name of M/s. Fabritex Exports Pvt Ltd which has ceased to exists long before on account of mergers and de-mergers.
Conclusion- Merger or amalgamation of companies is not a tool under law to either facilitate avoidance and evasion of tax liability already incurred by a transferor company like the Noticee. If the liabilities of the Noticee Company stood undischarged, the petitioner, as the successor of the business of the Noticee company and as the transferee company not only acquires the liabilities of the transferor company but also its assets, unless, the liability was retained by the promoters of the transferor company. The petitioner has not filed Scheme of Amalgamation before this Court. Therefore, Show Cause Notice proceeding cannot be scuttled.
Held that since, the benefit of advance license was availed by the Noticee (transferor) and it had filed to discharge its obligation under the advance license, the liability has to be discharged by the transferee company as its successor. As a transferee company, the petitioner cannot state that the liability of the noticee company stood extinguished on account of its merger /amalgamation with it.
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