PrimeAxis Ltd. and BluePeak Ltd., two well-established manufacturing companies registered under GST in the State of Maharashtra, decided to…
CA Final · Indirect Tax Laws · RTP · May 2026
PrimeAxis Ltd. and BluePeak Ltd., two well-established manufacturing companies registered under GST in the State of Maharashtra, decided to strengthen their market presence by merging their operations. After following due legal procedures, they filed an application for merger before the Court. On 22 nd May, the Court passed an order approving the merger, stating that it would take effect retrospectively from 1 st April. However, an important transaction had already taken place on 15 th May, wherein PrimeAxis Ltd. supplied a consignment of taxable goods to BluePeak Ltd. The accountant of PrimeAxis Ltd. took the view that no GST was payable on this transaction. According to him, since the merger was effective from 1 st April (as per the Court's order), both companies were deemed to be one entity from that date. Therefore, the transfer of goods on 15 th May does not qualify as "supply” under GST. You are required to assess the technical veracity of the claim of the accountant of PrimeAxis Ltd.
Suggested Answer and Working Notes:
As per section 87, when two or more companies are merged in pursuance of an order of court or of Tribunal or otherwise and the order is to take effect from a date earlier to the date of the order and any two or more of such companies have supplied or received any goods or services or both to or from each other during the period commencing on the date from which the order takes effect till the date of the order, then such transactions of supply and receipt shall be included in the turnover of supply or receipt of the respective companies and they shall be liable to pay tax accordingly. For the purposes of this Act, the said two or more companies shall be treated as distinct companies for the period up to the date of the said order. The registration certificates of the said companies shall be cancelled with effect from the date of the said order. Thus, in the given case, then such transactions of supply and receipt shall be included in the turnover of supply and receipt of PrimeAxis Ltd. and BluePeak Ltd. respectively and they shall be liable to pay tax accordingly.
Topics: Liability to pay tax in Certain Cases
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