Appointed date as approved by High Courts has to be considered the date of amalgamation and therefore, the services provided by the respondent in subsequent period should be considered to be services to self-service tax paid thereon, therefore, is eligible for refund.

Appointed date as approved by High Courts has to be considered the date of amalgamation and therefore, the services provided by the respondent in subsequent period should be considered to be services to self-service tax paid thereon, therefore, is eligible for refund.

The respondent and M/s. Ansal Hotels Ltd. were subsidiary of M/s. ITC Ltd. However, both these subsidiaries were amalgamated into the holding Company. The Hon. Delhi and Kolkata High Courts sanctioned the scheme in September 2004 w.e.f. 01.04.2004. Therefore, the respondent filed a refund claim for service tax paid for services rendered by them to the holding company during the period from April 2004 to September 2004, considering the services provided to self in view of the orders of High Courts. The original adjudicating rejected the refund claim considering the effective date as the date on which all the orders, sanctions, approvals, consents, conditions, matters or filings were obtained/ filed. The respondent had filed application with the Registrar of Companies on 23.03.2005, therefore, effective date of amalgamation was considered to be 23.03.2005. The Commissioner (Appeals) observed that: The date provided in the scheme of amalgamation was to be considered to be the effective date as held by the Hon. Apex Court in case of M/s. Marshall Sons & Co. (India) Ltd. vs. Income Tax Officers 1997 (223) ITR 0809 SC and all the entities to be considered as one entity w.e.f. 01.04.2004 and consequently, services provided between the entities should be considered as services to self, not leviable to service tax relying upon following decisions:

•  Precot Mills Ltd. vs. C. C. E., Tirupati 2006 TIOL 818 CESTAT-Bang.
•  Kwality Zipper Ltd. vs. C. C. E., Kanpur 2002 (145) ELT 296 (Tri.-Del)

 The matter was remanded back to the original adjudicating authority to verify service tax involved in the matter and that the burden of the same was not passed on to others. The department on the other hand contended that as per the scheme of amalgamation, the employees of the transferor company were transferred to the transferee company w.e.f. 23.03.2005. Therefore, the separate identity of the service provider and service receiver remained intact till 23.03.2005 and the scheme further specified that any transactions or proceedings already concluded on or before the effective date should not be affected by the scheme of amalgamation. As per the decision in case of M/s. Wallace Flour Mills Co. Ltd. vs. Collector of Central Excise 1989 (44) ELT 598 (SC), the excise duty had to be determined at the rate prevalent on the date of removal, therefore, the taxable event being provision of service, contrary order cannot be passed by the Commissioner (Appeals).

Held:

In case of M/s. Marshall Sons & Co. (India) Ltd. (Supra), the Hon. Apex Court had held that the date of amalgamation as presented in the scheme, has to be considered to be the transfer date and not the date of the order sanctioning the scheme. The law declared by the Hon. Supreme Court was binding on all the Courts as per Article 141 of the Constitution of India and therefore, the ratio laid down in the Income Tax Act can be made applicable to Service Tax Laws in view of peculiar facts of the case. The Hon. Tribunal’s decision in case of Technocraft Industries (I) Ltd. (Supra) supported the respondent’s case that effective date needed to be preferred over the approval date. Wallace Flour Mills (Supra), was not applicable as it did not deal with the effective date of amalgamation and, accordingly, department’s appeal was rejected.