In the context of tax laws, the ‘Doctrine of Merger‘ has gained significance and the intricacies involved in its relevance have dramatically drawn the attention of higher judiciary, even Tribunals, and it’d therefore be necessary to concentrate on the principle of the doctrine of merger.

Concretely stated, the concept of merger implies that while the order passed by a lower court of law or authority is susceptible to the recourse of appeal accessible before a superior court underneath the Act/Statute, and the superior court, after application of mind, disposes of the list before it, perhaps by setting aside or changing or affirming the ruling of the lower court of law or authority, the decision of the lower court or court or authority merges with the order of the superior court.

It is a rule of common law based on principles that ‘at a given point of time, there could be more than one operational order concerning the similar subject matter.’ ‘To merge’ indicates to sink into something else or disappear; to be absorbed or extinguished; to be merged or swallowed up.

Merger in law is defined as the absorption of a thing of lesser importance by a greater, whereby the lesser ceases to exist, but the greater is not increased; an absorption or swallowing up so as to involve a loss of identity and individuality. The doctrine of merger is neither a doctrine of Constitutional Law nor a doctrine which is statutorily recognized.”[1]

That being said, the IT Act, 1961 (‘Act’), acknowledges the concept of merger by integrating the very same with some of its provisions.

Essence: The Merger Doctrine

Where a law provides for an appeals, revisions, or some such other recourse against such a decision taken by any authorities, it is a well-established legal principle also that decision of such statutory body is the substantive ruling, and that by itself is efficient and lawful, whether such a statutory body confirms, modulates, or retracts the ruling of the lower body. All lower body decisions are thus merged with those from the intermediate or highest courts having deal with it.

As a result, as far since an order is issued in an appeals, revisions, in some other remedial clause of a law, the order that was questioned in these lawsuits ceases to function as a separate entity, and indeed the order of the ultimate authority solely exists after combining all or most of the subsequent authorities’ decisions in the case. In principle, this will be the merger theory.

Scope Of The Doctrine

Within framework of taxation statutes, the rule of merger will only be applied to issues found and determined by the adjudicating body, not to subjects which the aforementioned appellate court has no application of mind. In the lack of approval of the doctrine of merger, if an application is filed, the whole Decision of the Adjudicating Authority will be found to have consolidated in the Decision of the adjudicating body, regardless of the scope of the application or issues not addressed and determined in the appeal.

In Gojer Brothers v. Ratan Lal Singh[2], it was noted that this concept of merger was initially limited to appellate decrees since appeal was merely a continuity of the suit, and therefore it was later applied to other cases such as revisions, well as quasi-judicial and regulatory proceedings.

In Shankar R. Abhyankar v. K.D. Bapat[3], it was decided that perhaps revisional jurisdiction is indeed an integral part of appellate jurisdiction, but that scope of doctrine of merger would extend to revision decisions as well.

In Somnath Sahu v. State of Orissa[4], it was laid that the doctrine becomes applied to administrative orders wherein a subordinate body’s order was kept in merge with such a higher authority’s orders.


[1] Kunhayammed v. State of Kerala, (2000) 245 I.T.R. 360 (India).

[2] Gojer Brothers v. Ratan Lal Singh, A.I.R. 1974 S.C. 1380 (India).

[3] Shankar R. Abhyankar v. K.D. Bapat, A.I.R. 1970 S.C. 1 (India).

[4] Somnath Sahu v. State of Orissa, (1969) 3 S.C.C. 384 (India).

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