UMICORE AUTOCAT INDIA PRIVATE LIMITED, THR. ITS DIRECTOR KEDAR SATISH RELE v. UNION OF INDIA, THR. ITS SECRETARY TO GOVT. OF FINANCE AND 4 ORS.,
ITC Transfer in Amalgamation: High Court Clarifies No Inter-State Restriction under CGST Act Section 18(3) and Rule 41, Ensuring Seamless Credit Flow.
Court: Bombay High Court
Citation: 2025:BHC-GOA:1234-DB
Decision Date: 10-07-2025
List of Laws
Central Goods and Services Tax Act, 2017; Central Goods and Services Tax Rules, 2017; Integrated Goods and Services Tax Act, 2017; Goa Goods and Services Tax Act, 2017; Companies Act, 2013; Constitution of India
- Facts: Umicore Autocat India Private Limited (the Petitioner), formed after the amalgamation of Umicore Anandeya India Private Limited, sought to transfer unutilized Input Tax Credit (ITC) from the transferor company. The GSTN portal rejected the transfer, citing that the transferor and transferee must be in the same State/Union Territory. The transferor company, Umicore Anandeya India Private Limited, was registered in Goa, while the transferee company, the Petitioner, is registered in Maharashtra. The Petitioner argued that Section 18(3) of the CGST Act, 2017, and Rule 41 of the CGST Rules, 2017, do not impose such restrictions on ITC transfer in cases of amalgamation.
- Procedural Posture: The Petitioner filed a writ petition in the High Court of Bombay at Goa challenging the restriction imposed by the respondents on the transfer of unutilized ITC. The petition was heard at the stage of admission, and the court issued a ‘Rule’ making it returnable forthwith.
- Issue: Whether Section 18(3) of the Central Goods and Services Tax (CGST) Act, 2017, and Rule 41 of the CGST Rules, 2017, restrict the transfer of unutilized Input Tax Credit (ITC) in cases of amalgamation where the transferor and transferee companies are located in different states.
- Holding: The High Court held that Section 18(3) of the CGST Act, 2017, read with Rule 41 of the CGST Rules, 2017, does not impose any restriction on the transfer of unutilized ITC in the electronic credit ledger from the transferor to the transferee company, even if they are located in different states, in cases of amalgamation. The court directed the transfer of IGST and CGST amounts by physical mode, pending updates to the GSTN portal.
- Reasoning: The Court reasoned that the intention of the GST legislation is to simplify the tax system and avoid cascading taxes by providing a seamless chain of set-off. Restricting ITC transfer between states in cases of amalgamation would contradict this objective. The court emphasized that Section 18(3) allows ITC transfer in cases of mergers, demergers, amalgamations, etc., without specifying any restrictions based on the location of the entities. The court also noted that the GST is a destination-based tax, and the Central Government would not suffer any loss by allowing the ITC to be utilized in Maharashtra. The court distinguished the Madras High Court's decision in MMD Heavy Machinery, noting that it involved a different set of facts where a factory was shut down and the case pertained to Cenvat Credit Rules, 2004, not the CGST Act, 2017. The court also observed that the GSTN portal's inability to facilitate such transfers cannot be a ground to deny the benefit to the petitioner, if it is so entitled in the wake of the statutory scheme.
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