1. This trade tax revision was filed by the Revisionist-Company against the order dated 22.2.2019 passed by the Commercial Tax Tribunal in Second Appeal no.217/2018 by which it has rejected the Second Appeal of the Revisionist against the order dated 25.9.2018 passed by the Additional Commissioner in First Appeal no.512/2018 and thus affirmed the order dated 16.4.2018 passed by the Assessing Authority for Assessment Year 2016-17.2. There was some delay in filing the Revision which has been condoned by this Court by detailed order on 13.11.2019. The Revision was admitted by this Court's order dated 20.11.2019 on three questions of law framed by it.3. Heard Sri Manish Singh and Sri Dileep Singh for the Revisionist and Sri Rohit Nandan Shukla for the State respondents.4. This case relates not to any alleged avoidance of tax or imposition of Penalty but to the refusal of Assessing Officer to accept the application dated 27.2.2018 filed by the Revisionist praying for issuance of Form D to be utilized by it for benefit of claiming Tax Exemption as per notification issued by the Government dated 3.3.2016. Form D is the prescribed form issued under sub section 3A of Section 4 of U.P. Tax on Entry of Goods into Local Area Act, 2007 (hereinafter referred to as 'the Act 2007') read with sub-rule 1 of Rule 5 of U.P. Tax on Entry of Goods into Local Area Rules, 2008 (hereinafter referred to as 'the Rules of 2008').5. Under Section 4 of U.P. Tax on Entry of Goods into Local Area Act, 2007, the State is entitled to levy and realise a tax on entry of goods specified in the Schedule into a local area for consumption, use or sale therein, from any place out of the local area at such rate not exceeding 5% of value of goods as specified by the State Government by notification. Different rates may be specified in respect of different goods or different class of goods. The State Government may by notification amend the Schedule and also by notification exempt certain goods from levy of Entry Tax.6. Under Rule 5(1) of the Rules of 2008, a declaration regarding proof of payment of tax referred to in sub section 3A of Section 4 of the Act shall be made in Form D, and the same Form D shall be utilized also for the purpose of claiming exemption from payment of Entry Tax. The State Government by a notification no. KA.NI.-2-320/XI-9(81)/97-U.P.Act-30-07-Order-(152)-2016 dated 3.3.2016 (hereinafter referred to as exemption notification dated 3.3.2016) has exempted sugar manufactured during Crushing Season 2015-16 by a Sugar Mill established in U.P. from levy of Entry Tax subject to following conditions:(i) The manufacturer Sugar Mill shall issue a certificate prescribed by the Commissioner Commercial Taxes to the purchasing dealer that the sugar sold has been manufactured during the Crushing Season 2015-16 and as such it is exempt from the levy of tax;(ii) The purchasing dealer shall not pay tax on such sugar to the above manufacturer;(iii) The purchasing dealer shall issue prescribed declaration as envisaged in sub-rule (1) of rule 5 of Rules of 2008 to the subsequent purchaser, if any, who intends to bring such sugar in a different local area in respect of the sugar purchased against the aforesaid certificate issued by the Sugar Mill to ensure that no Entry Tax is payable at any subsequent stage.7. This exemption notification has been issued in continuance of earlier exemption notification for sugar Crushing Season 2013-14 dated 10.1.2014. It also provided a similar condition for issuance of Form K as proof of manufacturing year of sugar on which exemption from Entry Tax was claimed by the assessee. Form K is issued by manufacturing Sugar Mill as certificate to the dealer that sugar sold has been manufactured during Crushing Season mentioned in the exemption notification and as such, it is exempted from levy of Entry Tax.8. The format for issuance of Form K was released by the State Government by notification dated 16.1.2014. The same Form K which was issued in pursuance of notifications dated 10.1.2014 and 16.1.2014 has been continued for providing exemption from payment of Entry Tax for sugar produced during Crushing Season 2015-16.9. It is the case of Revisionist that it deals with sale and purchase of sugar and Form D is required to be issued to it by its buyers as proof of fact that sugar that is being sold by the Revisionist is exempted from payment of Entry Tax and no Entry Tax has been levied on such sugar. The Revisionist being trader of cane sugar had acquired entire business of M/s. Ritesh Vyaapar Ltd. which company merged into Revisionist's Company under Amalgamation Scheme approved by the High Court of Delhi by order dated 26.2.2016 in Company Petition No.631/2015.10. Under Sections 391 and 394 of Indian Companies Act, a scheme was formulated for amalgamation of several companies including M/s. Ritesh Vyaapar Ltd. into Revisionist's Company, as a result of which the entire undertaking including properties, rights and powers of the transferor Company stood transferred to the Revisionist. Details of the Scheme of Amalgamation were mentioned in the order of Delhi High Court dated 26.2.2016, relevant paragraphs of which are being quoted hereinbelow:"15. To be noted, the scheme in clause 4.2(k) provides that all employees of transferor companies, in service on the effective date, shall become the employees of the transferee company, on such date without any break or interruption in service and on terms and conditions as to remuneration not less favorable than those subsisting with reference to the transferor companies, as on the said date.16. In terms of the provisions of Section 391 and 394 of the Act, and in terms of the scheme the entire undertaking, properties, rights and powers of the transferor companies, will stand transferred to and/or vest in transferee company, without any further act or deed. Similarly, in terms of the scheme, all liabilities and duties of the transferor companies shall stand transferred to transferee company, without any further act or deed.17. Furthermore, as per clause 4.12 of the scheme, the transferor companies shall stand dissolved without being wound up."11. It is case of Revisionist that M/s. Ritesh Vyaapar Ltd. was also engaged in purchase and sale of cane sugar from M/s. Bajaj Hindustan Sugar Mill and other Sugar Mills and as per the Scheme of Amalgamation, all remaining stock of sugar purchased by M/s. Ritesh Vyaapar Ltd. for the Crushing Season 2015-16 was transferred to Revisionist on the amalgamation coming into effect. Such sugar stock was exempted from Entry Tax as M/s. Bajaj Hindustan Sugar Mill had issued Form K as prescribed by exemption notification issued by the department certifying that the sugar which was produced for the Crushing Season 2015-16 had been sold to M/s. Ritesh Vyaapar Ltd. without charging any entry tax.12. The Revisionist having acquired all leftover sugar stock of transferor Company needed to further sell the stock of sugar so acquired to other dealers both within State of U.P. and outside State of U.P. The Revisionist for issuing such certificate as required under Exemption Notification of 2016 requested the Assessing Officer for issuance of blank Form D under the Rules of 2008 as dealers to which such sugar stock was to be sold had to be given such Form D, which were to be shown by such subsequent purchasers along with tax invoices to their respective Assessing Officers for finalizing individual annual assessment. The final assessment of these subsequent purchasers being already in process, the application was submitted on 27.2.2018 for 3,32,969 quintals of sugar acquired by the Revisionist-Company on 1.4.2016, in terms of amalgamation order dated 26.2.2016 passed by the High Court of Delhi. The Revisionist had sold 1,19,707 quintals of sugar valued at Rs.42,67,60,351 to several traders in State of U.P. and 2,13,262 quintals of sugar valued at Rs.77,20,26,314/- to dealers outside of State of U.P.13. The Assessing Authority rejected the application of Revisionist dated 27.2.2018 on the ground that Revisionist could not prove that sugar it had acquired from M/s. Ritesh Vyaapar Ltd. had been the exempted sugar stock for Crushing Season 2015-16 under Exemption Notification of 2016.14. It has been submitted by the learned counsel for Revisionist that all copies of Form K issued online by the department have been filed along with Application for Interim Relief filed in this Revision. Form K issued in favour of original trader M/s. Ritesh Vyaapar Ltd. clearly showed that amount of sugar for which Form K was issued i.e. 10,53,928 quintals. The bills raised by M/s. Bajaj Hindustan Sugar Mill for sale of such sugar to M/s. Ritesh Vyaapar Ltd. have been also filed before this Court and were also filed before the Assessing Authority at the time of consideration of Revisionist's application for issuance of blank Form D. For some quantity of sugar sold by M/s. Ritesh Vyaapar Ltd. before its merger with the Revisionist, M/s. Ritesh Vyaapar Ltd. had asked the Department to issue Form D, which has been issued, but 3,32,969 quintals of sugar was leftover for the year 2015-16, which stood transferred along with other assets of Company on its merger with the Revisionist on 1.4.2016. It was for this leftover stock that the Revisionist had made the application dated 27.2.2018 along with copy of order of High Court of Delhi dated 26.2.2016. The Assessing Officer clearly could not understand the meaning of merger/amalgamation and treated the Revisionist as subsequent purchaser of sugar stock of M/s. Ritesh Vyaapar Ltd. and in his order rejecting such application, referred to the fact that petitioner could not produce any documentary proof/certificate issued by M/s. Ritesh Vyaapar Ltd. in its favour while transferring the sugar stock as was the prerequisite condition under exemption notification of 2016.15. Aggrieved by the order passed by the Assessing Authority dated 16.4.2018, a First Appeal was filed which was also rejected summarily by stating very same reason, as mentioned in the order of Deputy Commissioner/Assessing Authority. The Revisionist being aggrieved, filed a Second Appeal which has been rejected by the Tribunal. Hence this Revision has been filed.16. Counsel for Revisionist has pointed out from annexures to this Revision, annexure-9 at page-94 where Form K issued in favour of M/s. Ritesh Vyaapar Ltd. by the Department for the year 2015-16 has been filed which clearly mention the manufacture/seller as M/s. Bajaj Hindustan Sugar Mill, and purchaser/dealer as M/s. Ritesh Vyaapar Ltd. The details of Form K for the year 2015-16 show total quantity in quintals of sugar purchased by M/s. Ritesh Vyaapar Ltd. and total value of such sugar.17. Sri Manish Singh has also argued that a Show Cause Notice was issued for finalizing assessment of M/s. Ritesh Vyaapar Ltd. by the Assessing Officer and final order was passed on 16.5.2019 copy of which, has been filed as annexure-13 to the paper book, which clearly shows that Assessing Officer was aware of High Court of Delhi's order dated 26.2.2016 and merger of M/s. Ritesh Vyaapar Ltd. with Revisionist and transferor Company ceasing to exist thereafter. It was pointed out that on internal page 2 of Assessment order, there is clear mention of transfer of stock of leftover sugar for the year 2015-16. It mentioned leftover/remaining stock as 3,32,969 quintals. It was same quantity of leftover stock for which Revisionist has requested the Assessing Officer to issue Form D which would then have been filled up by it and later on, issued to subsequent 360 traders/dealers to whom such sugar stock was sold by the Revisionist.18. It has been submitted that while noting the argument raised by the Appellant, the Tribunal failed to take into account the fact that merger and transfer of stock as a result of amalgamation order of High Court was not in fact purchase of such sugar stock. The Tribunal has while rejecting the Second Appeal referred to two reasons to come to its conclusion. Firstly, transfer of stock had not been done on 1.4.2016 but before that date and it amounted to the Revisionist becoming a subsequent purchaser and initial purchaser M/s. Ritesh Vyaapar Ltd. had failed to issue any certificate as per exemption notification of 2016 in favour of revisionist, secondly it observed that the appellant had failed to prove that sugar stock which was transferred before 1.4.2016 was of that sugar which was manufactured during Crushing Season 2015-16 and not of any other previous year.19. It has been submitted that first reason mentioned for rejection of Second Appeal by Tribunal has resulted from a very clear misunderstanding of Amalgamation Scheme and the order of the High Court dated 26.2.2016 and the second reason for rejection of Second Appeal cannot also be sustained because sugar being a perishable edible commodity all sugar stock that is manufactured is stamped with specific manufacturing date mentioned on packaging. Bajaj Hindustan Sugar Mill had issued sale certificate in terms of Exemption Notification and then Form K was issued to M/s. Ritesh Vyaapar Ltd. and the stock was checked and certificate produced was for Crushing Season 2015-16.20. Counsel for Revisionist has argued that the Revisionist is facing great difficulty as some of stock of sugar transferred to it by M/s. Ritesh Vyaapar Ltd. has in fact been sold by Revisionist to 360 dealers. This sugar was manufactured during the year 2015-16 and hence exempted from levy of Entry Tax but it could not be certified by Revisionist to be so exempted under the exemption notification of 2016. Form D in respect of sugar having not been issued, the Assessing Officers of respective Regions may take coercive action against the dealers to whom such sugar is sold, as a result, all dealers have been approaching the Revisionist repeatedly for providing Form D and failure of Revisionist to give Form D to its dealers, may lead to further legal complications for the Company.21. Sri Rohit Nandan Shukla, learned Standing Counsel for State respondents has argued that supplementary affidavit filed by Revisionist on 1.10.2020 cannot be relied upon by Revisionist as it does not disclose amount of closing stock. The Assessment order dated 25.3.2019 for Assessment Year 2015-16 issued by Assessing Authority for M/s. Ritesh Vyaapar Ltd. does not mention closing stock but only mentions deposit of Form K and that the Assessing Officer had failed to find any adverse material on record against the dealer M/s. Ritesh Vyaapar Ltd.22. Learned Standing Counsel has also pointed out from operative portion of order of the Tribunal that no certificate or documentary evidence was filed by the Revisionist before the Assessing Officer to claim that such sugar was actually produced during Crushing Season 2015-16 and had been certified to be so produced by M/s. Ritesh Vyaapar Ltd. He has also argued that from perusal of order of Second Appeal it appears that High Court of Delhi's order was not produced by the Revisionist before the Assessment Officer and the Additional Commissioner, Appeals and therefore Revisionist cannot now rely upon the Amalgamation Order in Second Appeal which argument was not pressed before the Assessment Officer and the Additional Commissioner, Appeals.23. Sri Manish Singh in rejoinder has submitted that from perusal of SA-1 and SA-2 dated 25.3.2019 and 22.10.2019 respectively, it is clear that Assessment Officer has mentioned in Para 3, the purchase of sugar amounting to Rs.3,28,54,20,634/- as mentioned at Serial no.2 having been bought by M/s. Ritesh Vyaapar from M/s. Bajaj Hindustan Sugar Mill and the the leftover stock has also been mentioned with value of Rs.105,75,54,980/-. Since it is on a printed Form issued by the Department itself, it does not refer to the quantity of remaining stock, but only refers to the value of such stock. The value mentioned in Para 4 of such order is same value of remaining stock of sugar for which Form D was prayed for from the department, and for which Form K was submitted by M/s. Ritesh Vyaapar Ltd. before the Assessing Officer and which was accepted by the Assessing Officer in his orders dated 25.3.2019 and 22.10.2019.24. This Court has carefully gone through entire documentary evidence which was before the Assessing Officer and which has been filed as annexures to this Revision. This Court while admitting Revision has framed following questions of law:"i. WHETHER the action of the Respondents in not issuing FORM-D in favour of the Revisionist after approval of the scheme of amalgamation by the Hon'ble High Court of Delhi vide order dated 26.02.2016 in Company Petition No. 631 of 2015 under the provisions of Section 391 and 394 of the Indian Companies Act, is legal and justified on the part of the Respondent authorities?ii. WHETHER the action of the Respondents in not issuing FORM-D in favour of the petitioner is justified particularly when it infringes the exemptions granted by the State Government vide notification dated 03.03.2016?iii. WHETHER the Respondents herein as well as the Tribunal below were justified in not appreciating the fact that by virtue of merger and amalgamation being done under Section 391 and 394 of the Indian Companies Act that any tax benefit or exemption that may be available to the Transferor Company shall also enure to the Transferee Company?"25. There is no doubt expressed by the Standing Counsel with regard to issuance of Form K in favour of M/s. Ritesh Vyaapar Ltd. by the department for the amount of sugar mentioned therein. Form K was issued in pursuance of exemption notification 2016 and it clearly mentioned the details of issuance viz. date of such Form K, date of purchase of such sugar, details of crushing season, proof of invoices, amount of sugar in quintals and amount of sugar value in rupees.26. In the Supplementary Affidavit, a document issued by Deputy Commissioner, Commercial Tax, Gonda on 22.10.2019 has been filed which has not been denied at any stage by the State respondents. It is also not disputed by State respondents that M/s. Ritesh Vyaapar Ltd. has merged as per Amalgamation Scheme approved by Delhi High Court in Revisionist's Company w.e.f. 1.4.2016 and all sugar stock remaining as on date of merger, became sugar stock of Revisionist and it was entitled to the same exemption on entry tax as claimed by initial purchaser M/s. Ritesh Vyaapar Ltd. on the basis of Form K issued on purchase of sugar from M/s. Bajaj Hindustan Sugar Mill Ltd.27. It is also not disputed that only the remaining stock was transferred as M/s. Ritesh Vyaapar Ltd. had sold a major portion of sugar that it had bought from M/s. Bajaj Hindustan Sugar Mill Ltd. during the course of Crushing Season 2015-16. M/s. Ritesh Vyaapar Ltd. was also issued blank Form D by the Assessing Officer on its request which M/s. Ritesh Vyaapar Ltd. utilized in certifying to its respective purchasers/dealers that such sugar had been manufactured during the Crushing Season 2015-16 and no entry tax was levied on the same. Form D issued by M/s. Ritesh Vyaapar Ltd. was accepted by the Department and no questions were asked as is evident from Assessment Order passed in favour of M/s. Ritesh Vyaapar Ltd. copy of which has been filed as annexure to this Revision. Such annexures remain uncontroverted.28. If M/s. Ritesh Vyaapar Ltd. would have continued to exist then the sugar stock it had remaining on 1.4.2016 would have been entitled to exemption from Entry Tax. If such stock being in possession of M/s. Ritesh Vyaapar Ltd. was entitled to exemption from Entry Tax then such stock on being transferred on the acquisition of company by the Revisionist would also be entitled to such exemption being manufactured in the Crushing Season 2015-16 and being bought from same manufacturer M/s. Bajaj Hindustan Sugar Mills in the same Assessment Year.29. This is a classic case of Tax Authorities ignoring documentary evidence already in their possession while assessing a Company which was merged with the Revisionist. The import of Delhi High Court's order dated 26.2.2016 was also ignored altogether. It seems that the left hand does not know what the right hand is doing. The Assessing Authority accepted the very same documents when produced by M/s. Ritesh Vyaapar Ltd. showing that sugar which it had bought from M/s. Bajaj Hindustan Sugar Mill Ltd. was of the Crushing Season 2015-16 but inexplicably, the same Assessing Authority refused to accept same documentary evidence when produced by the Revisionist.30. The action of respondents in not issuing Form D in favour of Revisionist in pursuance of order dated 26.2.2016 is unjustified and arbitrary as the stock transferred on merger of Company has been treated to be sold by the transferor Company without there being any evidence with the Department to substantiate such claim.31. The action of respondents in not issuing Form D in favour of the revisionist also ignores the exemption granted by the State Government by notification dated 3.3.2016.32. The Tribunal as well as Assessing Authority and the Appellate Authority failed to appreciate that by virtue of merger and amalgamation having been done under Sections 391 and 394 of Indian Companies Act, tax benefits and exemptions that were available to Transferor Company would also enure to the Transferee Company i.e. Revisionist.33. The Hon'ble Supreme Court in M/s Dalmia Powe
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r Ltd. and another vs. Assistant Commissioner of Income Tax Circle 1, Trichy, Civil Appeal no.9496-99 of 2019 decided on 18.12.2019 has considered the consequences of merger of two Companies on the basis of an approved Amalgamation Scheme. It has observed in Paras 4.6 and 4.7 as under:"4.6. Pursuant thereto, the Schemes were sanctioned by the NCLT, Chennai vide Orders 16.10.2017, 20.10.2017, 26.10.2017, 28.12.2017, 10.01.2018, 20.04.2018 and 01.05.2018; and, vide Orders dated 18.05.2017 and 30.08.2017 by the NCLT, Guwahati. Accordingly, the Schemes attained statutory force 1 not only inter se the Transferor and Transferee Companies, but also in rem, since there was no objection raised either by the statutory authorities, the Department, or other regulators or authorities, likely to be affected by the Schemes.4.7. As a consequence, when the companies merged and amalgamated into another, the amalgamating companies lost their separate identity and character, and ceased to exist upon the approval of the Schemes of Amalgamation."34. The Supreme Court made these observations in a case where revised Income Tax Returns were rejected by the Department on merger of the transferor and transferee Company. The Supreme Court relied upon its observations in Marshall Sons and Company (India) Ltd. vs. ITO (1997) 2 SCC 302 to observe that pursuant to the Scheme of Arrangement and Amalgamation, the assessment of the transferee Company must take into account the income of both the transferor and transferee Companies. It was observed that filing of revised returns by the transferee Company was not because of any omission or wrong statement contained in the original returns but because delay occurred on account of time taken to obtain sanction of the Scheme of Amalgamation. In the present case the predecessor Company/transferor Company have been succeeded by the Revisionist/transferee Company who had taken over its business along with assets, liabilities, profits and losses etc. The stock transferred as a result of amalgamation was not a sale requiring issuance of certificate by M/s. Ritesh Vyaapar Ltd. in favour of the Revisionist as per the Exemption Notification of 2016.35. The questions on which the Revision was initially admitted are answered in favour of the Revisionist.36. The orders impugned are set aside.37. The Revision stands allowed. Consequences to follow.