Section 87 deals with the gap between the appointed date of an amalgamation and the date of the court or Tribunal order. Until the order, the companies remain separate for GST, and supplies between them are taxable.
Key points
- Under section 87(1) of the CGST Act, 2017, where an amalgamation or merger order takes effect from a date earlier than the order and the companies supplied or received goods or services to or from each other in between, those transactions are included in their respective turnovers and taxed.
- Under section 87(2) the companies are treated as distinct up to the date of the order, and their registrations are cancelled only from that date.
The provisions
87(1)–(2)Liability in case of amalgamation or merger
Statutory text
(1) When two or more companies are amalgamated or 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.
(2) Notwithstanding anything contained in the said order, 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 and the registration certificates of the said companies shall be cancelled with effect from the date of the said order.
*Enforced w.e.f. 1st July, 2017.
Statutory text as published on the CBIC tax information portal, as on 03.10.2026; the numbered notes record each amendment. Official source
Common questions
- Are supplies between merging companies before the merger order taxable?
- Yes. Section 87 of the CGST Act treats the companies as distinct until the date of the order, and their supplies to each other in that period are taxed.
Commentary and case notes checked against the judgments and CBIC sources on 04.10.2026.
What it means
The retrospective appointed date in a scheme does not undo GST already paid on inter-company supplies in the interim. Credit in the transferor's ledger may be transferred to the transferee under section 18(3) and Rule 41 (Form ITC-02).