Case Note & Summary
The writ petition arose from a dispute over transfer of unutilized Input Tax Credit (ITC) following a scheme of amalgamation sanctioned by the National Company Law Tribunal, Mumbai, on 26 May 2020, under Sections 230 to 232 of the Companies Act, 2013. The transferor company, Umicore Anandeya India Private Limited, had its manufacturing plant in Sancole Industrial Estate, Goa, and was registered under the Central Goods and Services Tax Act, 2017, while the transferee company, Umicore Autocat India Private Limited, the petitioner, had its plant in Shirwal, Maharashtra, and was registered under the Maharashtra Goods and Services Tax Act, 2017. The transferor had ceased operations and was non-operational for three years before amalgamation with appointed date 1 April 2019. The transferor's electronic credit ledger reflected IGST of Rs 3,69,586, CGST of Rs 3,52,84,105, and SGST of Rs 1,39,285. Upon attempting to file Form GST ITC-02 on the GSTN portal to transfer the entire unutilized ITC, the portal rejected the form with an error message stating that the transferor and transferee should be of the same State/UT. The transferor raised a query and received a reply that the system showed an error due to business logic. A representation to the State Tax Officer on 17 August 2020 resulted in a reply on 6 October 2020 stating that the department had no option or feature to resolve the technical issue. The petitioner then filed Writ Petition (L) No. 4263 of 2022 before the Bombay High Court, which was withdrawn on 17 October 2022 with liberty to file before the Goa Bench, leading to the present petition. The core legal issues were whether Section 18(3) of the CGST Act, 2017 and Rule 41 of the CGST Rules, 2017 restricted inter-state transfer of ITC on amalgamation, whether the concept of distinct persons under Section 25 of the CGST Act barred such transfer, and whether the GSTN portal's technical restriction was legally valid. The petitioner argued that Section 18(3) expressly allowed transfer of unutilized ITC on amalgamation without any state-based restriction, and that the amalgamation scheme fastened liabilities on the transferee, entitling it to the credit. The petitioner also referred to constitutional provisions Articles 269-A and 289 and Section 140 of the CGST Act. The respondents, particularly the State of Goa through the Advocate General, contended that Section 16 read with Section 25 treated each state registration as a distinct person, and ITC earned in one state could not be utilized in another; they relied on the Madras High Court decision in MMD Heavy Machinery (India) Pvt. Ltd. v. Assistant Commissioner, Chennai, (2021) 53 GSTL 3. The revenue argued that no mechanism existed for inter-state ITC transfer and that Goa would lose revenue. The court heard arguments and reserved judgment, but the text provided ends without the final operative decision. Therefore, the outcome remains unknown from the supplied excerpt.
Headnote
A) Goods and Services Tax - Input Tax Credit Transfer on Amalgamation - Inter-State ITC Transfer under Section 18(3) and Rule 41 - Central Goods and Services Tax Act, 2017, Section 18(3); Central Goods and Services Tax Rules, 2017, Rule 41 - The petitioner challenged the GSTN portal's rejection of Form GST ITC-02 for transfer of unutilized ITC upon amalgamation between companies registered in Goa and Maharashtra, seeking a direction to allow transfer without a same-State restriction. The court considered the statutory provisions and arguments but the final ruling is not included in the supplied text (Paras 1, 5-8). B) Goods and Services Tax - Interpretation of Registered Person and Distinct Persons - Sections 2(94), 25(2), 25(4) of CGST Act, 2017 - Respondents argued that each state registration creates a distinct person and ITC earned in one state cannot be transferred to another state after amalgamation. The court examined the statutory scheme of single registration per state and distinct persons under Section 25(4) (Paras 9-11). C) Goods and Services Tax - Inter-State ITC Transfer and Revenue Loss - Section 16, 18(3) CGST Act, 2017 - Revenue contended that State of Goa would lose revenue and no mechanism exists for inter-state ITC transfer, relying on Madras High Court decision in MMD Heavy Machinery (India) Pvt. Ltd. v. Assistant Commissioner, Chennai, (2021) 53 GSTL 3. The court noted the arguments but no final decision appears in the extract (Paras 9-12). D) Constitutional Law - Tax Territory and Transitional Provisions - Articles 269-A, 289; Section 140 CGST Act, 2017 - Petitioner referred to constitutional provisions and transitional arrangements to support transfer of ITC along with liabilities under amalgamation scheme. The court recorded contentions but no ruling is available (Para 13).
Issue of Consideration
Whether Section 18(3) of the Central Goods and Services Tax Act, 2017 and Rule 41 of the Central Goods and Services Tax Rules, 2017 impose any restriction on transfer of unutilized Input Tax Credit upon amalgamation where the transferor and transferee are registered in different States; Whether the concept of 'registered person' under Section 2(94) and distinct persons under Section 25 of the CGST Act prohibits inter-state ITC transfer on amalgamation; Whether the GSTN portal's technical restriction is legally valid and whether the court can direct transfer despite absence of mechanism; Whether constitutional and transitional provisions support transfer of ITC along with liabilities.
Final Decision
Not mentioned in the provided text.
Law Points
- Input Tax Credit transfer on amalgamation
- Section 18(3) CGST Act
- 2017
- Rule 41 CGST Rules
- distinct person under Section 25 CGST Act
- single registration per State
- no inter-state ITC transfer mechanism
- GSTN portal business logic error
- constitutional provisions Articles 269-A and 289
