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Bombay High Court: In connected petitions by IDFC First Bank Ltd. (IDFC Bank) against an order demanding the integrated goods and services tax (IGST) with interest and penalty against Capital First Ltd. (CFL), which was a non-existent entity post amalgamation with the petitioner, the Division Bench of G.S. Kulkarni* and Aarti Sathe, JJ., held that there was no doubt that CFL was a non-existent entity and thus no proceedings qua the said entity could be adopted against the petitioner; petition allowed and impugned order set aside.
Also Read: SC explains taxability of share substitution in amalgamation | SCC Times
Background
The dispute arose after goods and services tax (GST) authorities initiated scrutiny and audit proceedings against CFL, despite it having amalgamated with IDFC Bank pursuant to an order of the National Company Law Tribunal dated 12 December 2018. Following the amalgamation, CFL’s registration was cancelled in June 2019.
Thereafter, between 2022 and 2023, the respondent authorities issued multiple notices in the name of CFL concerning alleged discrepancies in GST returns and audit proceedings for the financial year 2018-2019. In response, the petitioner repeatedly informed the authorities that CFL had ceased to exist due to amalgamation and contended that proceedings initiated against a non-existent entity were void in law.
Despite such objections, the authorities continued the audit proceedings, issued show-cause notices, and ultimately passed an order confirming IGST demands with interest and penalty against CFL. Aggrieved thereby, IDFC Bank approached the High Court challenging the validity of the proceedings and the impugned order issued in the name of a non-existent entity.
Also Read: GSTR: Latest Cases on Goods & Services Tax | SCC Times
Analysis and Decision
At the outset, the Court observed that the show-cause notices had been issued to a non-existent entity, namely, CFL.
The Court noted that the National Company Law Tribunal, Chennai, had approved the scheme of amalgamation, whereby 3 companies, i.e., CFL, Capital First Home Finance Limited and Capital First Securities Limited, stood amalgamated with IDFC Bank. The Court held that, consequent to such amalgamation, CFL had ceased to exist in law.
The Court further recorded that an application for cancellation of registration of CFL had thereafter been filed and orders cancelling such registration were passed on 21 January 2019 and 14 June 2019. The Court stated that the legal consequence of CFL ceasing to exist after amalgamation, pursuant to the NCLT’s orders, had to be recognised.
The Court noted that the respondents were fully aware that CFL no longer existed, but despite this being repeatedly placed on record, the impugned order was passed on a misplaced reliance on the provisions of Section 87, Central Goods and Services Tax Act, 2017 (CGST Act).
The Court, in the present matter, applied Vodafone Idea Ltd. v. Union of India1, wherein the Supreme Court’s judgment in CIT v. Maruti Suzuki (India) Ltd., (2020) 18 SCC 331, and other judgments were considered along with Section 87, CGST Act. The Supreme Court in the Vodafone case observed that Section 87, CGST Act cannot be read as enabling the respondents to continue to place a non-existent entity on notice or to pass an order of assessment against such an entity; the liabilities of the non-existent company would in any case stand transposed to be borne by the amalgamated entity.
The Court held that considering the undisputed facts of the case pertaining to amalgamation of the erstwhile entity CFL, there was no doubt that the same was a non-existent entity. The Court thus held that no proceedings qua the said entity could be adopted against the petitioner.
Accordingly, the Court allowed the present petition and the impugned order was set aside.
Also Read: Masterclass on GST | Tarun Jain on Constitutional Amendment & GST Council | SCC Times
[IDFC First Bank Ltd. v. State of Maharashtra, WP No. 3390 of 2025, decided on 7-5-2026]
*Judgment authored by Justice G. S. Kulkarni.
Advocates who appeared in this case :
For the petitioners: Prakash Shah, Sr. Adv. a/w Jas Sanghavi, Mihir Mehta, Mohit Raval and Vikas Poojary i/b PDS Legal
For the respondents: Jyoti Chavan Addl. G.P. a/w Himanshu Takke, AGP for Respondent — State in Writ Petition No.3390 of 2024
Jyoti Chavan Addl. G.P. a/w Amar Mishra, AGP for Respondent — State in Writ Petition No.3607 of 2024
1. WP(C) No. 6637 of 2025.
