GST Update

 Desk of CA. Praveen Sharma – 1129 Series (CAPS) 

Madras High Court IN THE CASE OF M/s. EMC Limited v. The State Tax Officer & Ors.

Company: EMC Limited, wholly owned subsidiary of Salasar Techno Engineering Limited

Outcome: In favour of Revenue 

 GST demand: EMC challenged a demand of approximately ?87.68 lakh for FY 2021–22, including ?49.60 lakh tax.

Insolvency background: CIRP commenced in 2018; liquidation followed in 2023.

Going-concern acquisition: Salasar acquired the company through a sale approved by NCLT in October 2024.

Taxpayer’s argument: GST dues stood extinguished because the Department had not lodged its claim, invoking the clean-slate principle.

Court’s finding: A going-concern sale during liquidation does not automatically extinguish GST liabilities arising during CIRP. 

Corporate identity survives: The Court distinguished such a sale from liquidation culminating in dissolution.

Section 85 relevant: The Court referred to transferor–transferee liability for tax, interest and penalty on business transfers.

 Conditional opportunity: EMC was directed to deposit 25% of disputed tax within 30 days and submit a detailed reply.

Fresh adjudication: The Department must decide the matter within three months thereafter. Thus, the clean-slate plea failed, while the demand remained subject to reconsideration

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Best Regards,

CA Praveen Sharma

Mob. No. +91-98715 30610