High Court of Gujarat
M/S ALSTOM TRANSPORT INDIA LIMITED THROUGH ITS AUTHORISED SIGNATORY SHAH DIPTEJ HARSHADKUMARversusADDITIONAL COMMISSIONER, CGST AND CENTRAL EXCISE (APPEALS)
- Disposal
- 39-RULE DISCHARGED/DISMISSED @ FH
Holding
The Court held that the petitioner cannot claim refund of the untransferred portion of ITC and dismissed the writ petitions.
Summary
Alstom Transport India Ltd. (ATIL) sought to quash the order allowing an appeal that set aside a refund sanction granted to its predecessor, Alstom Rail Transportation India Ltd. (ARTIPL), after ARTIPL’s amalgamation into ATIL. The dispute centered on whether ARTIPL, which had transferred only part of its unutilized input tax credit (ITC) to ATIL and later claimed a refund for the balance, could do so after its GST registration was cancelled. The respondents argued that the CGST Act and Rules require the entire unutilized ITC to be transferred in an amalgamation and that the refund claim was therefore unlawful. The Court examined the statutory provisions (Sections 18, 22, 25, 29, 54, 87 of the CGST Act, and Rule 41 of the CGST Rules) and relevant case law, concluding that the partial transfer and subsequent refund claim violated the law. Consequently, the Court dismissed the writ petitions, refusing ATIL’s claim for the remaining ITC refund.
Issues considered
- Whether the transferor company ARTIPL was required to transfer the entire unutilized ITC to the transferee ATIL under Section 18(3) of the CGST Act and Rule 41 of the CGST Rules.
- Whether a refund claim for the untransferred portion of ITC can be made after the transferor’s GST registration has been cancelled.
- Whether the procedural requirements for registration and cancellation in the context of amalgamation under Sections 22, 25, 29 and 87 of the CGST Act were complied with.
- Whether the appellate order setting aside the refund sanction should be upheld.
Legislation cited
- Central Goods and Services Tax Act, 2017s. 107(11), s. 16(1), s. 16(3), s. 18(3), s. 22, s. 25, s. 29, s. 54, s. 54(3), s. 87
- Central Goods and Services Tax Rules, 2017s. 20, s. 22, s. 41, s. 8
- Integrated Goods and Services Tax Act, 2017s. 16(1), s. 16(3)
Subjects
GSTAmalgamationInput Tax CreditRefundRegistration CancellationSection 18 CGST ActSection 54 CGST ActSection 87 CGST ActCorporate RestructuringTax Law
Judgment
C/SCA/11025/2025 CAV JUDGMENT DATED: 23/01/2026
Reserved On : 07/01/2026
Pronounced On : 23/01/2026
IN THE HIGH COURT OF GUJARAT AT AHMEDABAD
R/SPECIAL CIVIL APPLICATION NO. 11025 of 2025
With
R/SPECIAL CIVIL APPLICATION NO. 11029 of 2025
With
R/SPECIAL CIVIL APPLICATION NO. 11030 of 2025
With
R/SPECIAL CIVIL APPLICATION NO. 11033 of 2025
With
R/SPECIAL CIVIL APPLICATION NO. 11034 of 2025
With
R/SPECIAL CIVIL APPLICATION NO. 11035 of 2025
With
R/SPECIAL CIVIL APPLICATION NO. 11043 of 2025
FOR APPROVAL AND SIGNATURE:
HONOURABLE MR. JUSTICE A.S. SUPEHIA Sd/-
and
HONOURABLE MR. JUSTICE PRANAV TRIVEDI Sd/-
================================================================
Approved for Reporting Yes No
a
================================================================
M/S ALSTOM TRANSPORT INDIA LIMITED THROUGH ITS AUTHORISED
SIGNATORY SHAH DIPTEJ HARSHADKUMAR
Versus
ADDITIONAL COMMISSIONER, CGST AND
CENTRAL EXCISE (APPEALS) & ORS.
================================================================
Appearance:
MR. SUJIT GHOSH, SENIOR ADVOCATE WITH MS. MANNAT WARAICH,
MS. ANSHIKA AGARWAL, MR. SHREY BHATT WITH MR. ADITYA J
PANDYA, Advocates for the Petitioner(s) No. 1
PARAM V SHAH(9473) for the Respondent(s) No. 1,2,3,4
================================================================
CORAM:HONOURABLE MR. JUSTICE A.S. SUPEHIA
and
HONOURABLE MR. JUSTICE PRANAV TRIVEDI
COMMON CAV JUDGMENT
(PER : HONOURABLE MR. JUSTICE A.S. SUPEHIA)
(1) The present group of petitions involves a common
question of law and, therefore, they have been
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heard together and are being decided analogously
by this common judgment.
FACTS:
(2) Special Civil Application No.11025 of 2025 is
taken as a lead matter.
(3) The captioned writ petitions are filed by the
the petitioner - Alstom Transport India Ltd.
(ATIL), seeking quashing and setting aside the
Orders-in-Appeal dated 08.01.2025 passed by
respondent No.1-Additional Commissioner, CGST &
Central Excise (Appeals), Vadodara, passed under
Section 107(11) of the Central Goods and Service
Tax, 2017 (hereinafter referred to as “the
CGST, Act, 2017”) allowing the appeal filed by
respondent No.2 - Assistant Commissioner, CGST &
Central Excise, Division-V, Vadodara-II, against
the Refund Sanction Orders dated 28.02.2024
passed by respondent No.3, Deputy Commissioner,
CGST & Central Excise, Division-V, Vadodara-II,
in FORM RFD-06.
(4) The identity of the petitioner - Company
emanates from the order dated 10.08.2023, passed
by the National Company Law Tribunal (NCLT)
dissolving three entities - (i) Alstom Rail
Transportation India Pvt. Ltd. (ARTIPL), (ii)
Alstom Manufacturing India Pvt. Ltd. (AMIPL),
and (iii) Alstom System India Pvt. Ltd. (ASIPL),
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and sanctioning their amalgamation into the
petitioner. The certified copy of the said order
was issued on 28.08.2023 and was thereafter
filed with the Registrar of Companies (RoC) on
22.09.2023.
(5) In terms of the Scheme of Amalgamation, the
entire business of the three dissolved entities,
including, inter alia, all assets, liabilities,
rights, title, interests, obligations, and
immovable properties, one of them being ARTIPL,
stood transferred to and vested in the
petitioner upon the Scheme coming into effect
from the appointed date. As per the Scheme, the
“effective date” was the date on which the
certified copy of the NCLT order was last filed
with the Registrar of Companies, which, in the
present case, is 22.09.2023.
(6) The aforesaid arrangement and development were
duly intimated by ARTIPL to the Superintendent,
Range-II, Division-V, Vadodara-II, vide letter
dated 10.10.2023 i.e. within two weeks from the
effective date.
(7) The erstwhile ARTIPL, having exported goods in
April 2023, filed an application dated
04.01.2024 seeking refund of unutilized Input
Tax Credit (ITC) in terms of Section 16 of the
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Integrated Goods and Services Tax Act, 2017
(IGST Act, 2017) read with Section 54(3) of the
CGST Act, 2017.
(8) It appears that on 20.10.2023, FORM GST ITC-02
was filed by erstwhile ARTIPL Ltd. in terms of
Section 18(3) of the CGST Act, 2017 read with
Rule 41 of the Central Goods and Service Tax
Rules, 2017 (hereinafter referred to as “the
CGST Rules, 2017”) for transfer of part amount
of unutilized ITC of Rs.192,87,53,211/- out of
total available unutilized ITC of
Rs.242,02,00,000/-. However, the amount in
question of Rs.49,14,00,000/- remained in the
Electronic Credit Ledger of ARTIPL, and was not
sought to be transferred. Thereafter, it appears
that from 04.01.2024 to 28.02.2024, the ARTIPL
filed various refund claim (month-wise) for
different amounts totaling to unutilized ITC of
Rs.49,14,00,000/-. Adjudication took place at
various levels in respect of aforesaid various
refund applications.
(9) Accordingly, a show cause notice dated
22.02.2024 was issued to the ARTIPL, and upon
submission of objections on 28.02.2024, a Refund
Sanction Order came to be passed in favour of
ARTIPL, and the refund amount of
Rs.2,56,75,437/- has been encashed.
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(10) Subsequently, on 29.07.2024, respondent No.4
reviewed the Refund Order under Section 107(2)
of the CGST Act, 2017, and passed an Order-in-
Review Order on 29.07.2024, directing the
Respondent no.3, to file an appeal in FORM GST
APL-03 for the period from 01.04.2023 to
30.04.2023.
(11) Accordingly, respondent No.3 preferred an appeal
against the ARTIPL, which came to be allowed
vide order dated 08.01.2025 setting aside the
order granting refund, which has giving a cause
to file the captioned writ petitions.
(12) It appears that, during the aforesaid
proceedings of refund, a show cause notice dated
07.11.2024 was issued to the ARTIPL proposing
cancellation of its GST registration. The said
show cause notice was adjudicated by an order
dated 29.11.2024, whereby the GST registration
of the ARTIPL came to be cancelled. In the said
order, it was specifically provided that the
effective date of cancellation of registration
would be 29.11.2024.
(13) Thus, from a perusal of the aforementioned key
dates, it can be noticed that even though the
ARTIPL was dissolved and amalgamated into the
petitioner vide order of the NCLT dated
10.08.2023, certified copy of which was filed
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with the RoC on 22.09.2023, and intimation of
which was given to the respondents on
10.10.2023, until 29.11.2024 the ARTIPL existed
as a registered person under the GST and was
recognized so by the respondent authorities.
SUBMISSIONS MADE ON BEHALF OF THE PETITIONER:
(14) Learned Senior Advocate Mr.Ghosh has made the
following submissions :
(15) All the proceedings were initiated in the name
of the ARTIPL all throughout. However, on and
from 29.11.2024 i.e. the date of the
cancellation of the registration, the ARTIPL
cannot be said to exist for the purpose of the
GST Laws.
(16) Reference is made to Clause 8.1 of the Scheme of
Amalgamation, and is contended that the
Transferee Company is obliged to bear both the
burdens and benefits of all legal, taxation, and
other claims or investigations of whatsoever
nature pertaining to the transferor companies.
He has also referred to the contents of
Paragraph No.13 of the NCLT order, which records
that any claim against the Transferor Companies
in respect of direct and indirect taxes shall be
settled by the Transferee Company, hence
accordingly, in terms of the NCLT order and the
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undertakings furnished thereunder, in respect of
the GST proceedings initiated against the
Transferor Company i.e. the ARTIPL, the
Transferee Company i.e. the petitioner, is
obligated to prosecute and / or defend the same.
(17) It is contended that once the GST registration
of the ARTIPL stood cancelled, the ARTIPL cannot
be said to have had any legal existence, either
under the Company Law or under the GST law, so
as to be capable of instituting or prosecuting
any legal proceedings.
(18) A refund, being in the nature of a State
largesse, can be claimed only in strict
accordance with the statutory framework
governing the same. Under the GST regime,
persons effecting zero-rated supplies constitute
one of the categories entitled to claim refund.
In terms of Section 16(1) of the IGST Act, 2017,
“zero-rated supply” includes exports of goods
and services. Section 16(3) of the IGST Act,
2017 is the provision which creates the
statutory right to claim refund of unutilized
input tax credit in respect of exports of goods
and services. However, the claim for refund must
be made in accordance with Section 54 of the
CGST Act, 2017 and is subject to such
conditions, safeguards, and procedures as may be
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prescribed. Reference is made to Section 54(3)
of the CGST Act, 2017, which further imposes
restrictions, inter alia, that refund of
unutilized ITC shall not be admissible where the
export of goods is subject to export duty, or
where the claimant has availed drawback in
respect of such goods. Thus, it is submitted
that the statutory and substantive right to
claim refund flows from Section 16(3) of the
IGST Act, 2017, and a fundamental precondition
for the accrual of such right is that the zero-
rated supply must be made by a registered
person. Section 16(3) clearly postulates that,
on the date of making the zero-rated supply, the
claimant of the refund must be a registered
person.
(19) It is contended that in the present case, the
ARTIPL had effected exports in the month of
April 2023, at which point in time it had
neither undergone amalgamation nor had its
registration been cancelled. It had, therefore,
fulfilled all the substantive preconditions for
claiming refund of unutilized ITC. Consequently,
upon effecting such exports, a vested and
enforceable right to claim refund accrued in
favour of the ARTIPL under Section 16(3) of the
IGST Act, 2017.
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(20) With regard to the Legislative policy underlying
special treatment to exports by grant of refunds
(particularly refund of unutilized ITC) and its
relevance to the present case, it is contended
that such refunds of unutilized ITC are denied
to exporters, and the embedded input taxes would
either inflate the cost of the exported product
or would have to be absorbed by the exporter,
both of which would defeat the underlying policy
objective.
(21) Reliance is placed on Paragraphs No.29 and 30 of
the decision of this Court in the case of
Macrowagon Retail Pvt. Ltd. and Anr. vs. Union
of India and Ors., 2025 S.C.C. OnLine Guj. 3644
and decision of the Supreme Court in the case of
Union of India and Ors. vs. VKC Footsteps India
Pvt. Ltd., (2022) 2 S.C.C. 603, and on the
judgment rendered by the learned Single Judge of
the Karnataka High Court in the case of Tonbo
Imaging India Pvt. Ltd. vs. Union of India and
Ors., 2023 (73) GSTL 200 (Kar.).
(22) While placing reliance on the decision of the
Supreme Court in the case of Government of
Kerala and Anr. vs. Mother Superior, (2021) 5
S.C.C. 602 it is contended that any ambiguity in
the interpretation of such beneficial provisions
must enure to the benefit of the taxpayer.
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(23) The respondents have denied the refund by
alleging that there is violation of Section
18(3) of the CGST Act, 2017 read with Rule 41 of
the CGST Rules, 2017 inasmuch as, out of the
total unutilized ITC, it retained a sum of
Rs.49.14 crore, which was thereafter sought to
be utilized for claiming refund. It is contended
that it is manifest from the reason assigned
that the respondents are neither disputing the
fulfillment of the substantive conditions for
eligibility to avail the ITC and to claim refund
of unutilized ITC in respect of exports effected
by the ARTIPL, nor is there any dispute with
regard to the factual position that the ARTIPL
qualifies as an exporter and had in fact
effected exports, since there is no finding in
the impugned appellate order alleging violation
of Section 16(3) of the IGST Act, 2017 or
Section 54(3) of the CGST Act, 2017.
(24) It is the contended that the interpretation
adopted by the respondents on the aforesaid
provisions is wholly misconceived since Section
18(3) of the CGST Act, 2017 is a permissive
provision and not mandatory which enables a
registered person to transfer unutilized ITC to
the transferee in the event of amalgamation, and
the said provision does not mandate that the
Transferor Company must transfer its unutilized
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ITC, nor does it contain any stipulation that,
if such transfer is effected, the entire quantum
of unutilized ITC must necessarily be
transferred.
(25) It is submitted that the expression “transfer of
the entire unutilized ITC” is conspicuously
absent both in Section 18(3) of the CGST Act,
2017 as well as in Rule 41 of the CGST Rules,
2017. Hence, in such circumstances, to read into
Section 18(3) of the CGST Act, 2017 a
requirement of compulsory transfer of the entire
unutilized ITC would amount to judicial
legislation, which is impermissible in law in
view of settled principles of statutory
interpretation. In this regard, reliance is
placed on the decision of the Supreme Court in
the case of Padmasundara Rao & Ors. vs. State of
T.N. & Ors., (2002) 3 S.C.C. 533.
(26) In a situation where a transferor chooses not to
transfer any part of its unutilized ITC to the
transferee company pursuant to an amalgamation,
there exists no provision under the CGST Act,
2017 which empowers the authorities to compel
such transfer or to take any punitive action for
non-transfer, which itself, demonstrates that
both the decision to transfer ITC and the
quantum of ITC to be transferred lie entirely
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within the domain of the transferor, and the
Revenue has no role to play in this regard.
(27) That a fair reading of Section 18(3) of the CGST
Act, 2017 read with Rule 41 of the CGST Rules,
2017 indicates that the respondents have no
regulatory role in such transfer, except to
prescribe the form, provide access to the
portal, and require furnishing of a Chartered
Accountant’s certificate. Significantly, under
Rule 41(3) of the CGST Rules, 2017, the
acceptance of the transfer is to be given by the
transferee and not by the Department.
(28) Thus, it is submitted that, in these
circumstances, Section 18(3) of the CGST Act,
2017 read with Rule 41 of the CGST Rules, 2017
is nothing but a permissive and enabling
provision, which is directory in nature and
devoid of any mandatory character. Substantial
compliance with such a permissive and directory
provision is sufficient. Reliance is placed on
the decision in the case of Administrator
Municipal Committee Charkhi Dadari & Anr. vs.
Ramji Lal Bagla & Ors. (1995) 5 S.C.C. 272.
While placing reliance on the decision of Hari
Vishnu Kamath vs. Syed Ahmad Ishaque & Ors.,
(1954) 2 S.C.C. 881 (Constitution Bench), it is
submitted that it is well established that an
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enactment in form mandatory might in substance
be directory, and that the use of the word
“shall” does not conclude the matter and the
practical bearing of the distinction between a
provision which is mandatory and one which is
directory is that while the former must be
strictly observed, in the case of the latter it
is sufficient that it is substantially complied
with.
(29) In so far as violation of Rule 41 of the CGST
Rules, 2017 is concerned, the submission of the
petitioner is that even the said Rule does not
mandate that the entire unutilized credit needs
to be transferred in the case of an
amalgamation. No doubt, in the case of demerger,
a certain restrictive covenant has been
incorporated by providing that the ITC shall be
apportioned in the ratio of value of assets of
the new unit, however, even this restrictive
covenant has no application in the present case,
since the present case is a case of amalgamation
and not a demerger. It is contended that
wherever the legislature wanted to use the word
“entire”, it has done so, as can be discerned
from perusal of Explanation to Rule 41(1) of the
CGST Rules, 2017 where the phrase “entire asset
of business” has been used. If the intention of
the Legislature was to require a Transferor
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Company to transfer its entire unutilized
credit, then nothing stopped the Legislature in
incorporating the word “transfer of entire
unutilized credit” in Rule 41(1) of the CGST
Rules, 2017 or Section 18(3) of the CGST Act,
2017.
(30) While dealing with the objections raised by the
revenue, for the alleged violation of Section
87(2) of the CGST Act, 2017, it is contended
that in so far as Section 87(2) of the CGST Act,
2017 is concerned, the said provision
contemplates that from the date of the NCLT
order, the registration certificate of the
amalgamating company is liable to be cancelled.
However, since the power and responsibility to
cancel registration is statutorily vested in the
respondent Department and not in the petitioner,
the provision does not mandate that the
transferor must necessarily apply for
cancellation of registration prior to or upon
the effective date of the NCLT order. Hence, no
such obligation can be foisted upon the
transferor in the present case, and that apart,
considering the fact that the respondent-
Department was duly intimated of the
amalgamation as early as on 10.10.2023, the
authorities ought to have initiated proceedings
for cancellation of registration forthwith under
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Section 29 of the CGST Act, 2017 read with Rule
22 of the CGST Rules, 2017, which empowers the
proper officer to cancel registration suo motu,
even with retrospective effect.
(31) It is submitted that even when the respondent
authorities eventually exercised such power by
issuing show cause notice dated 07.11.2024 and
passing the cancellation order dated 29.11.2024,
they consciously chose to cancel the
registration only prospectively i.e. w.e.f.
29.11.2024, and not retrospectively. In these
circumstances, the petitioner cannot be accused
of having violated Section 87(2) of the CGST
Act, 2017. In any event, unlike Section 29(4) of
the CGST Act, 2017, which provides for deemed
cancellation of registration in certain
circumstances, Section 87(2), read with Sections
29(1) and 29(2) of the CGST Act, 2017, does not
contemplate any deemed cancellation in cases of
amalgamation. On the contrary, Section 29 of the
CGST Act, 2017, in its opening part itself,
makes it clear that cancellation is to be
effected by the proper officer either on his own
motion or upon an application filed by the
registered person. The respondent authorities,
if aggrieved by the prospective nature of the
cancellation or believed the same to be legally
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untenable, they ought to have challenged the
cancellation order in appeal. Having failed to
do so, the said order has attained finality
inter se between the parties.
(32) In the alternative, it is contended that
without prejudice to the above, and in order to
safeguard the vested right to refund which
accrued to the ARTIPL and now stands vested in
the petitioner by virtue of amalgamation, it is
submitted that even if this Court is not
inclined to accept the methodology adopted in
the present case, this Court may be pleased to
mould the relief by directing the respondent
authorities to permit the petitioner to file a
fresh refund application manually and to process
the same notionally, without raising objections
relating to non-compliance of Section 16(3) of
the IGST Act, 2017 in the hands of the
petitioner,portal-related technical impediments,
or limitation. In such an event, the amount
already disbursed may be directed not to be
recovered, and while passing the fresh refund
order, the amount earlier paid may be adjusted.
Such an approach would be both equitable and
consistent with the purpose of the law governing
the zero-rated supplies.
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SUBMISSIONS ON BEHALF OF THE RESPONDENTS:
(33) Learned Senior Standing Counsel Mr.Param Shah
has made the following submissions.
(34) It is a settled principle of law that a taxing
statute must be construed strictly on the basis
of what is expressly provided therein, and that
neither any addition or subtraction, nor any
presumption or assumption, can be made beyond
the clear language of the statute. In support of
the said submission, the respondents have placed
reliance upon the judgment of the Supreme Court
in the case of Chief Commissioner of Central
Goods and Service Tax & Ors. vs. M/s.Safari
Retreats Private Limited & Ors., 2024 INSC 756,
wherein the Supreme Court has succinctly
reiterated the settled principles governing the
interpretation of taxing statutes.
(35) Reference is made to the provisions of Sections
18 and 87 of the CGST Act, 2017 read with Rule
41 of the CGST Rules, 2017, and it is submitted
that a conjoint and harmonious reading of the
said provisions leaves no manner of doubt that,
in the event of amalgamation, the unutilized
Input Tax Credit of the erstwhile company can be
transferred to the transferee company only by
filing Form GST ITC-02 electronically in the
prescribed manner.
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(36) There exists no statutory provision enabling the
transferee company to seek encashment of such
unutilized ITC in any form, including by way of
a refund application. Furthermore, there is also
no provision permitting partial transfer of the
unutilized ITC of the transferor company in the
case of amalgamation. In the present case, the
ARTIPL, by acting contrary to law and on its own
volition, filed Form ITC-02 for only a part of
the ITC and thereafter proceeded to file refund
applications for the remaining amount, which
course of action is wholly impermissible in law.
(37) It is further submitted that the erstwhile
ARTIPL, despite having ceased to exist with
effect from 22.09.2023, addressed an intimation
letter dated 10.10.2023 stating that it was in
the process of undertaking all compliance under
the GST Law. This clearly demonstrates that it
was the obligation of the transferor company to
apply for cancellation of its GST registration
on account of amalgamation. However, no such
application was ever made, and the said company
continued to file returns until 06.02.2025.
(38) Even after the lapse of more than one year from
the effective date of amalgamation, no
application for cancellation of GST registration
was filed, which could very well have been done
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by the officers of the Transferee Company i.e.
the petitioner. The respondent Department was,
therefore, constrained to issue a show cause
notice dated 07.11.2024, which ultimately
culminated in the cancellation order dated
29.11.2024.
(39) From the conduct of the petitioner, it is
manifest that the application for cancellation
of registration was deliberately not filed with
a mala fide intention to encash the unutilized
ITC by way of refund applications, which is
otherwise impermissible under the statute. The
petitioner, therefore, cannot be permitted to
take advantage of its own wrong.
ANALYSIS AND OPINION
The facts established from the pleadings
(40) The following events emerge from the facts and
pleadings:
a) The order of the NCLT approving scheme of
amalgamation of the erstwhile ARTIPL and two
other entities into ATIL vide order dated
10.08.2023.
b) Certified copy of NCLT order issued on
28.08.2023.
c) The RoC Certification of the ATIL is dated
22.09.2023.
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d) ATIL filed FORM GST REG-1 under Rule 8 of the
CGST Rules, 2017 on 10.05.2023 in anticipation
of the NCLT order.
e) It was registered w.e.f 25.5.2023 vide
certificate issued on 21.12.2025.
f) Intimation by ARTIPL of amalgamation on 10.10.23
to authorized officer.
g) Show-cause notice for cancellation of
registration of the ARTIPL issued on 07.11.2024.
h) The ARTIPL registration cancelled w.e.f
29.11.2024 from the said date.
[
i) Amount of Rs.192.88 Cr. was claimed through FORM
GST ITC-02 by the ARTIPL on 20.10.2023 of
unutilized ITC.
j) Refund Sanctioned Order FORM GST RFD-06 passed
on 28.02.2024 of Rs.2,56,75,437/- of granting
the ITC in favour of the ARTIPL.
[[
k) Order dated 08.01.2025 passed in Appeal under
Section 107(11) of the CGST Act, 2017 cancelling
the refund sanction order dated 28.02.2024.
ISSUE OF REGISTRATION OF THE PETITIONER-ATIL AND
ERSTWHILE ARTIPL ON AMALGAMATION :
(41) Keeping in mind the aforementioned dates, regis-
tration / cancellation of respective ARTIPL and
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AITL respectively and in order to appreciate the
rival contentions, it will be necessary to have
a closer look to the statutory provisions of
CGST ACT, 2017 and Rules, which are as below:
“SECTION 22 : Persons liable for registration
(1) Every supplier shall be liable to be registered
under this Act in the State or Union territory, other
than special category States, from where he makes a
taxable supply of goods or services or both, if his
aggregate turnover in a financial year exceeds twenty
lakh rupees:
Provided that where such person makes taxable supplies
of goods or services or both from any of the special
category States, he shall be liable to be registered
if his aggregate turnover in a financial year exceeds
ten lakh rupees.
[PROVIDED FURTHER that the Government may, at the
request of a special category State and on the
recommendations of the Council, enhance the aggregate
turnover referred to in the first proviso from ten
lakh rupees to such amount, not exceeding twenty lakh
rupees and subject to such conditions and limitations,
as may be so notified:]
[PROVIDED FURTHER that the Government may, at the
request of a State and on the recommendations of the
Council, enhance the aggregate turnover from twenty
lakh rupees to such amount not exceeding forty lakh
rupees in case of supplier who is engaged exclusively
in the supply of goods, subject to such conditions and
limitations, as may be notified.
Explanation : For the purposes of this sub-section, a
person shall be considered to be engaged exclusively
in the supply of goods even if he is engaged in exempt
supply of services provided by way of extending
deposits, loans or advances insofar as the
consideration is represented by way of interest or
discount.]
(2) Every person who, on the day immediately preceding
the appointed day, is registered or holds a licence
under an existing law, shall be liable to be
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registered under this Act with effect from the
appointed day.
(3) Where a business carried on by a taxable person
registered under this Act is transferred, whether on
account of succession or otherwise, to another person
as a going concern, the transferee or the successor,
as the case may be, shall be liable to be registered
with effect from the date of such transfer or
succession.
(4) Notwithstanding anything contained in sub-sections
(1) and (3), in a case of transfer pursuant to
sanction of a scheme or an arrangement for
amalgamation or, as the case may be, demerger of two
or more companies pursuant to an order of a High
Court, Tribunal or otherwise, the transferee shall be
liable to be registered, with effect from the date on
which the Registrar of Companies issues a certificate
of incorporation giving effect to such order of the
High Court or Tribunal.
Explanation : For the purposes of this section, -
(i) the expression "aggregate turnover" shall include
all supplies made by the taxable person, whether on
his own account or made on behalf of all his
principals;
(ii) the supply of goods, after completion of jobwork,
by a registered jobworker shall be treated as the
supply of goods by the principal referred to in
section 143, and the value of such goods shall not be
included in the aggregate turnover of the registered
jobworker;
(iii) the expression "special category States" shall
mean the States as specified in sub-clause (g) of
clause (4) of article 279A of the Constitution [except
the State of Jammu and Kashmir] [and States of
Arunachal Pradesh, Assam, Himachal Pradesh, Meghalaya,
Sikkim and Uttarakhand].
SECTION 25 : Procedure for registration
(1) Every person who is liable to be registered under
section 22 or section 24 shall apply for registration
in every such State or Union territory in which he is
so liable within thirty days from the date on which he
becomes liable to registration, in such manner and
subject to such conditions as may be prescribed:
xxx xxx xxx
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(8) Where a person who is liable to be registered under
this Act fails to obtain registration, the proper officer
may, without prejudice to any action which may be taken
under this Act or under any other law for the time being
in force, proceed to register such person in such manner
as may be prescribed.”
(42) As per the provisions of Section 22(1) of the
CGST Act, 2017, every supplier is liable to be
registered under the Act. Sub-section (4) to
Section 22 of the CGST Act, 2017 starts with a
non-obstante clause and mandates that “in a case
of transfer pursuant to sanction of a scheme or
an arrangement for amalgamation or, as the case
may be, demerger of two or more companies
pursuant to an order of a High Court, Tribunal
or otherwise, the transferee shall be liable to
be registered, with effect from the date on
which the Registrar of Companies issues a
certificate of incorporation giving effect to
such order of the High Court or Tribunal.” Thus,
as per Section 22(4) of the CGST Act, 2017, the
petitioner-ATIL was required to register itself
from the date on which the RoC issues
certificate of incorporation, which is
22.09.2023, within a period of 30 days as
prescribed under Section 25 of the CGST Act,
2017. ATIL will fall within the expression
“liable to be registered” found in both the
provisions.
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(43) However, it appears that the ATIL filed the
application for getting itself registered on
10.05.2023, prior to the order dated 10.08.2023
in anticipation, and thereafter it was
registered retrospectively w.e.f. from
25.05.2023 by issuing the certificate on
21.12.2025, whereas the RoC certificate is dated
22.09.2023. Thus, the filing of the application
by the ATIL before acquiring its statutory
identity itself was de hors the provision of
Section 25 of the CGST Act, 2017, since the ATIL
became liable to be registered only after the
order passed by the NCLT and issuance of
certificate by the RoC.
(44) Sub-section (8) to Section 25 of the CGST Act,
2017 confers suo motu powers to the authorized
officer to register such person, who becomes
liable to be registered under the Act, but fails
to do so, without prejudice to any action which
may be taken under the Act. The consequence of
not registering is prescribed in Section 122(xi)
of the CGST Act, 2017, which is payment of
penalty of ten thousand.
(45) Now, for examining the facet of cancellation of
transferor - ARTIPL, the relevant provisions
which are to be kept in mind are Section 29 of
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the CGST Act, 2017, and Rules 20 and 22 of the
CGST Rules, 2017. The same are as under:
“SECTION 29 : Cancellation "or suspension" of
registration :
(1) The proper officer may, either on his own motion
or on an application filed by the registered person or
by his legal heirs, in case of death of such person,
cancel the registration, in such manner and within
such period as may be prescribed, having regard to the
circumstances where,
(a) the business has been discontinued, transferred
fully for any reason including death of the
proprietor, amalgamated with other legal entity,
demerged or otherwise disposed of; or
(b) there is any change in the constitution of the
business; or
(c) the taxable person, other than the person
registered under sub-section (3) of section 25, is no
longer liable to be registered under section 22 or
section 24.
"Provided that during pendency of the proceedings
relating to cancellation of registration filed by the
registered person, the registration may be suspended
for such period and in such manner as may be
prescribed.";
(2) The proper officer may cancel the registration of
a person from such date, including any retrospective
date, as he may deem fit, where,
(a) a registered person has contravened such
provisions of the Act or the rules made thereunder as
may be prescribed; or
(b) a person paying tax under section 10 has not
furnished returns for three consecutive tax periods;
or
(c) any registered person, other than a person
specified in clause (b), has not furnished returns for
a continuous period of six months; or
(d) any person who has taken voluntary registration
under sub-section (3) of section 25 has not commenced
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business within six months from the date of
registration; or
(e) registration has been obtained by means of fraud,
wilful misstatement or suppression of facts:
Provided that the proper officer shall not cancel the
registration without giving the person an opportunity
of being heard.
"Provided further that during pendency of the
proceedings relating to cancellation of registration,
the proper officer may suspend the registration for
such period and in such manner as may be prescribed.".
(3) The cancellation of registration under this
section shall not affect the liability of the person
to pay tax and other dues under this Act or to
discharge any obligation under this Act or the rules
made thereunder for any period prior to the date of
cancellation whether or not such tax and other dues
are determined before or after the date of
cancellation.
(4) The cancellation of registration under the State
Goods and Services Tax Act or the Union Territory
Goods and Services Tax Act, as the case may be, shall
be deemed to be a cancellation of registration under
this Act.
RULE 20 : Application for cancellation of registration
A registered person, other than a person to whom a
registration has been granted under rule 12 or a
person to whom a Unique Identity Number has been
granted under rule 17, seeking cancellation of his
registration under sub-section (1) of section 29 shall
electronically submit an application in FORM GST REG-
16, including therein the details of inputs held in
stock or inputs contained in semi-finished or finished
goods held in stock and of capital goods held in stock
on the date from which the cancellation of
registration is sought, liability thereon, the details
of the payment, if any, made against such liability
and may furnish, along with the application, relevant
documents in support thereof, at the common portal
within a period of thirty days of the occurrence of
the event warranting the cancellation, either directly
or through a Facilitation Centre notified by the
Commissioner:
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RULE 22 : Cancellation of registration
(1) Where the proper officer has reasons to believe
that the registration of a person is liable to be
cancelled under section 29, he shall issue a notice to
such person in FORM GST REG-17, requiring him to show
cause, within a period of seven working days from the
date of the service of such notice, as to why his
registration shall not be cancelled.”
(46) Section 29 of the CGST Act, 2017 empowers the
proper officer to cancel the registration on his
own motion or on an application filed by the
registered person for various reasons prescribed
therein. One of the reason assigned in Clause(a)
of sub-section (1) to Section 20 of the CGST
Act, 2017 is the discontinuation of business due
to amalgamation, which is applicable in the
instant case. In this context, Rule 20 of the
CGST Rules, 2017 requires filing of an
application for cancellation of registration in
FORM GST REG-16 “within a period of thirty days
of the occurrence of the event warranting the
cancellation”. FORM-GST REG-16 contains
Instructions for filing of Application for
Cancellation. The instruction explicitly
provides that “The new entity in which the
applicant proposes to amalgamate itself shall
register with the tax authority before
submission of the application for cancellation.
This application shall be made only after the
new entity is registered”. Thus, FORM REG-16
will only operate on the eventuality of
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registration of the new entity i.e. the ATIL.
Thus, if the provisions of Section 29(1)(a) of
the CGST Act, 2017 are read with Rule 20 of the
CGST Rules, 2017, the event warranting the
cancellation in the instant case would be the
amalgamation of transferor-ARTIPL and ATIL, vide
order of NCLT dated 10.08.2023, and as per the
Scheme the effective date is 22.09.2023, which
is the filing of the certified copy of the order
of NCLT before the RoC. Thus, the ARTIPL was
supposed to file the GST REG-16 for cancellation
of its registration within a period of 30 days
in FORM GST-REG-16 from 22.09.2023, as per the
provision of Section 29(1) of the CGST Act, 2017
read with Rule 20 of the CGST Rules, 2017, after
the registration of ATIL, which it did choose to
do so, but chose to apply for refund of part of
amount of unutilized ITC, probably on
apprehension that its communication to the
authorized officer informing about the
amalgamation vide communication dated 10.10.2023
would satisfy the requirements of statutory
provision of Section 29 of the CGST Act, 2017
read with Rule 20 of the CGST Act, 2017.
(47) Thereafter, a show cause notice dated 07.11.2024
was issued for cancellation of registration to
ARTIPL by the Superintendent by citing the
provision of Section 29(1)(a) of the CGST Act,
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2017. From the contents of FORM GST REG-19, it
appears that in response to the show cause
notice, the erstwhile - ATIPL, vide letter dated
19.11.2024, informed the authority stating
specifically that the ARTIPL has amalgamated
into the ATIL and it would like to contest the
proposed cancellation, and sought 30 days time
and the refund application was under process.
Thereafter, it appears that after affording
personal hearing to the representatives of the
petitioner, the Superintendent passed an order
FORM GST REG-19 dated 29.11.2024, cancelling the
registration of the ARTIPL, making it effective
from the even date. Thus, the GST registration
of ARTIPL was cancelled w.e.f. 29.11.2024.
(48) The petitioner has attempted to take shelter
under the expression used in Section 29(1) of
the CGST Act, 2017 assigning power to proper
officer to take suo motu action of cancellation
of registration of the ARTIPL since it had
intimated the Jurisdictional Officer vide
communication dated 10.10.2023 about the details
of amalgamation and the effective date of
22.09.2023. It is pertinent to note that in this
communication the transferor - ARTIPL has
categorically made the following statement:
“Kindly consider this letter as an intimation
regarding the NCLT sanctioned amalgamation and to
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inform your goodselves that the transferor company
ARTIPL having GSTIN 24AAACA5584C1Z1 falling under the
jurisdiction of your goodselves is in the process of
undertaking and ensuring the fulfillment of all
relevant compliances and procedures applicable under
GST laws accordingly.”
Thus, the transferor-ARTIPL had given an
assurance to the Jurisdictional Officer that it
is in the process of undertaking and ensuring
the fulfillment of all relevant compliance and
procedures applicable under the GST laws, which
indubitably include the compliance of statutory
provisions relating to cancellation of
registration. In wake of the specific assurance
given by the ARTIPL, the Jurisdictional Officer
was not required to exercise his power suo motu.
However, if such officer had the knowledge or
was aware of the details of amalgamation, its
effective date, the date of certificate of the
RoC issued in the name of new entity, he / she
on having knowledge of such details was required
to form an opinion relating to cancellation of
registration under Rule 22 of the CGST Rules,
2017. Rule 22 starts with the sentence “Where
the proper officer has reasons to believe that
the registration of a person is liable to be
cancelled”. Thus, if the authorized officer is
having the requisite information relating to
amalgamation, which he had in the instant case,
such information can supply/satisfy the reasons
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qualifying him to believe that the registration
is liable to be cancelled, hence he / she is
required to issue notice to such person in FORM
GST REG-17 calling upon to show cause about the
cancellation of registration within seven days.
(49) It is also contended on behalf of the petitioner
that it was always open for the Jurisdictional
Officer to cancel the registration of ARTIPL
retrospectively, as per the provisions of
Section 29(2) of the CGST Act, 2017 i.e. from
the effective date of 22.09.2023, however, since
the registration is cancelled prospectively from
29.11.2024, the ARTIPL can be said to be in
existence. We do not subscribe to the submission
of retrospective cancellation of the ARTIPL on
reading of the provision of sub-section (2) of
Section 29 of the CGST Act, 2017. Sub-section
(2) thereof empowers the proper officer to
cancel the registration from such date,
including any retrospective date as he may deem
fit in those circumstances as mentioned from
clauses (a) to (e) such as contravention of
provisions of the Act, commission of fraud etc,
since the sub-section (2) of Section 29 of the
CGST Act, 2017 ends with the word “where” which
prescribe the eventuality of clauses prescribed
from (a) to (e), which is not the case of the
petitioner.
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(50) At this stage, it would be apposite to refer to
Section 87 of the CGST Act, 2017, which reads
thus:
“SECTION 87 : Liability in case of amalgamation or
merger of companies :
(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.”
(51) Section 87 of the CGST Act, 2017 prescribes the
liability in case of amalgamation or merger of
companies. For the purpose of registration of
effect of amalgamation on the registration of
the ARTIPL, the provision of sub-section (2) to
section 87 of the CGST Act, 2017 bears
relevance. Sub-section (2) to section 87 of the
CGST Act, 2017 begins with non-obstante clause
and also has an added expression “for the
purpose of this Act”. Non-obstante clause has
been inserted with reference to the “said order”
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which is in context with sub-section (1), which
again is in context with the order passed by the
Court or Tribunal sanctioning amalgamation or
merger. Sub-section(2) directs that two or more
companies are to 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”. Thus,
the statutory provision of sub-section (2) to
Section 87 of the CGST Act, 2017 overrides the
intention of treating two or more companies as
distinct companies for the purpose of the Act,
and the registration certificate of such
companies is required to be cancelled from the
“date of the order” passed by the Court or
Tribunal sanctioning amalgamation or merger of
the companies.
(52) In the present case, the registration of ARTIPL
has been cancelled on 29.11.2024, which again
does not reconcile with the provision of Section
87(2) of the CGST Act, 2017. In the instant
case, the NCLT dissolved ‘three’ entities (1)
Alstom Rail Transportation India Pvt. Ltd., (2)
Alstom Manufacturing India Pvt. Ltd., and (3)
Alstom System India Pvt. Ltd. and amalgamated
into the petitioner - ATIL. Thus, the identity
of transferor - ARTIPL as distinct company will
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exist till the date of order of NCLT, and its
registration is required to be cancelled with
effect from the date of order of NCLT i.e.
10.08.2023.
ILLEGALITY/IRREGULARITY NOTICED FROM THE FACTS OF
REGISTRATION AND CANCELLATION OF REGISTRATION OF
ATIL & ARTIPL RESPECTIVELY
a) Non-filing of application by erstwhile ARTIPL
seeking cancellation of its registration despite
having lost its identity w.e.f. 10.08.2023 under
Rule 20 of the CGST Rules, 2017 within a period
of 30 days from the date of passing of the NCLT
order or receipt of certified copy or from the
issuance of certificate by RoC.
b) Cancellation of registration on 29.11.2024 of
ARTIPL before the registration of ATIL. (vide
order dated 21.12.2025 w.e.f 25.05.2023) in
violation of instructions in FORM REG-16.
c) Action of the Jurisdictional Officer in ignoring
the communication dated 10.10.2023 written by
erstwhile ARTIPL, and not initiating proceedings
under Rule 22 of the CGST Rules, 2017.
d) Issuance of the show cause notice dated
07.11.2024 to ARTIPL after one year by the
Jurisdictional Officer.
e) Cancellation of registration of erstwhile ARTIPL
on and w.e.f. 29.11.2024, instead of date of
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order of NCLT or from the date of issuance of
certificate by RoC.
f) Filing of FORM GST-REG-1 under Rule 8(5) of the
CGST Rules, 2017 by transferee-ATIL for its
registration on 10.05.2023 before the order
passed by NCLT on 10.08.2023, and issuance of
its incorporation by RoC on 22.09.2023 resulting
into violation of provisions of Section 25.
[
g) Failure to take steps for registration of ATIL
as per the provision of sub-section (8) of
section 25 of the CGST Act, 2017 despite having
known the status of ATIL and ARTIPL vide
communication dated 10.10.2023. No steps taken
under Section 122(xi) of the CGST Act, 2017.
h) Conferral of the GST Registration of transferee-
ATIL retrospectively w.e.f. 25.05.2023 vide
certificate issued on 21.12.2025 in violation of
Section 22(4) of the CGST Act, 2017 on an
application filed before the effective date of
22.09.2023.
i) Thus, on an overall appreciation of facts, it is
evident that both the transferor - ARTIPL and
transferee - ATIL have violated the statutory
provisions. The provisions regulating
registration of the ATIL and cancellation of
registration by the erstwhile - ARTIPL after
amalgamation, are blatantly disregarded, by both
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the entities and also by the respondent
officers, and rather it is noticed the
Jurisdictional Officer has facilitated the
irregularity. If the aforementioned dates are
closely analyzed both ARTIL and ATIL would be
existing and their entities will be recognized
after the order passed by the NCLT and issuance
of RoC despite failure to act as per the Act and
Rules. The GST registration of the transferee -
ATIL is from 25.05.2023, (before the order of
NCLT), and the cancellation of transferor -
ARTIPL is from 29.11.2024. Thus, ARTIPL, though
lost its identity after the effective date
22.09.2023 continued to retain it till
29.11.2024, simultaneously with the existence of
identity of ATIL w.e.f. 25.05.2023, and claimed
refund of unutilized ITC lying in the electronic
ledger. It is true that there is no provision in
the GST Act which enables the cancellation of
the registration by deeming fiction, but the
same is reliant on the statutory provisions,
which are required to be followed scrupulously,
more particularly in case of amalgamation. The
respective entities cannot be allowed to carry
out business function simultaneously after
effective date, except to the extent it is
permissible within the contours governing the
relevant provisions of the Act and Rules.
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ASPECT OF CLAIM OF UNUTILIZED ITC LYING IN ECL
(53) In the instant case, the relevant provisions
governing the transfer and refund of the ITC are
Sections 54 and 18 of the CGST Act, 2017 and
Rule 41 of the CGST Rules, 2017, which are as
follows:
“SECTION 54 : Refund of tax
(1) Any person claiming refund of any tax and
interest, if any, paid on such tax or any other amount
paid by him, may make an application before the expiry
of two years from the relevant date in such form and
manner as may be prescribed:
Provided that a registered person, claiming refund of
any balance in the electronic cash ledger in
accordance with the provisions of sub-section (6) of
section 49, may claim such refund in the return
furnished under section 39 in such manner as may be
prescribed.
xxx xxx xxx
(3) Subject to the provisions of sub-section (10), a
registered person may claim refund of any unutilised
input tax credit at the end of any tax period:
Provided that no refund of unutilised input tax credit
shall be allowed in cases other than
(i) zero rated supplies made without payment of tax;
(ii) where the credit has accumulated on account of
rate of tax on inputs being higher than the rate of
tax on output supplies (other than nil rated or fully
exempt supplies), except supplies of goods or services
or both as may be notified by the Government on the
recommendations of the Council:
Provided further that no refund of unutilised input
tax credit shall be allowed in cases where the goods
exported out of India are subjected to export duty:
Provided also that no refund of input tax credit shall
be allowed, if the supplier of goods or services or
both avails of drawback in respect of central tax or
claims refund of the integrated tax paid on such
supplies.
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SECTION 18 : Availability of credit in special
circumstances :
(1) Subject to such conditions and restrictions as may
be prescribed
(a) a person who has applied for registration under
this Act within thirty days from the date on which he
becomes liable to registration and has been granted
such registration shall be entitled to take credit of
input tax in respect of inputs held in stock and
inputs contained in semi-finished or finished goods
held in stock on the day immediately preceding the
date from which he becomes liable to pay tax under the
provisions of this Act;
(b) a person who takes registration under sub-section
(3) of section 25 shall be entitled to take credit of
input tax in respect of inputs held in stock and
inputs contained in semi-finished or finished goods
held in stock on the day immediately preceding the
date of grant of registration;
(c) where any registered person ceases to pay tax
under section 10, he shall be entitled to take credit
of input tax in respect of inputs held in stock,
inputs contained in semi-finished or finished goods
held in stock and on capital goods on the day
immediately preceding the date from which he becomes
liable to pay tax under section 9:
Provided that the credit on capital goods shall be
reduced by such percentage points as may be
prescribed;
(d) where an exempt supply of goods or services or
both by a registered person becomes a taxable supply,
such person shall be entitled to take credit of input
tax in respect of inputs held in stock and inputs
contained in semi-finished or finished goods held in
stock relatable to such exempt supply and on capital
goods exclusively used for such exempt supply on the
day immediately preceding the date from which such
supply becomes taxable:
Provided that the credit on capital goods shall be
reduced by such percentage points as may be
prescribed.
(2) A registered person shall not be entitled to take
input tax credit under sub-section (1) in respect of
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any supply of goods or services or both to him after
the expiry of one year from the date of issue of tax
invoice relating to such supply.
(3) Where there is a change in the constitution of a
registered person on account of sale, merger,
demerger, amalgamation, lease or transfer of the
business with the specific provisions for transfer of
liabilities, the said registered person shall be
allowed to transfer the input tax credit which remains
unutilised in his electronic credit ledger to such
sold, merged, demerged, amalgamated, leased or
transferred business in such manner as may be
prescribed.
RULE 41 : Transfer of credit on sale, merger,
amalgamation, lease or transfer of a business
(1) A registered person shall, in the event of sale,
merger, de-merger, amalgamation, lease or transfer or
change in the ownership of business for any reason,
furnish the details of sale, merger, de-merger,
amalgamation, lease or transfer of business, in FORM
GST ITC-02, electronically on the common portal along
with a request for transfer of unutilized input tax
credit lying in his electronic credit ledger to the
transferee:
Provided that in the case of demerger, the input tax
credit shall be apportioned in the ratio of the value
of assets of the new units as specified in the
demerger scheme.
(2) The transferor shall also submit a copy of a
certificate issued by a practicing chartered
accountant or cost accountant certifying that the
sale, merger, de-merger, amalgamation, lease or
transfer of business has been done with a specific
provision for the transfer of liabilities.
(3) The transferee shall, on the common portal, accept
the details so furnished by the transferor and, upon
such acceptance, the un-utilized credit specified in
FORM GST ITC-02 shall be credited to his electronic
credit ledger.
(4) The inputs and capital goods so transferred shall
be duly accounted for by the transferee in his books
of account.”
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(54) The petitioner - ATIL is claiming refund of
unutilized tax credit under Section 54(3) of the
CGST Act, 2017 for making exports falling under
zero rated supplies by erstwhile ARTIPL. As per
the provision of Section 18(3) of the CGST Act,
2017 read with Rule 41 of the CGST Rules, 2017,
the erstwhile ARTIPL in FORM GST ITC-02 on
20.10.2023 applied for transfer of unutilized
ITC to the tune of Rs.192,87,53,211/- out of
Rs.242,02,00,000/- to the petitioner ATIL,
keeping remainder of the amount of
Rs.49,14,00,000/- in the Electronic Credit
Ledger of erstwhile ARTIPL. Thereafter, the
ARTIPL filed refund application under Section
54(3) of the CGST Act, 2017 amounting to
Rs.2,56,75,437/- on 04.01.2024 under the
category of “ITC accumulated due to Exports of
Goods / Services-without payment of Tax” for a
period of 01.04.2023 to 30.04.2023, which was
allowed by the competent authority vide order
dated 28.02.2024, which was subsequently set
aside by the impugned order.
(55) With reference to the provision of Section 54(3)
of the CGST Act, 2017, assertion of the Supreme
Court in the case of Union of India vs. VKC
Footsteps (India) (P) Ltd., (2022) 2 S.C.C.
603 : (2021) 93 GSTR 160, needs to be referred,
which reads thus:
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“99. We must be cognizant of the fact that no
constitutional right is being asserted to claim a
refund, as there cannot be. Refund is a matter of a
statutory prescription. Parliament was within its
legislative authority in determining whether refunds
should be allowed of unutilised ITC tracing its origin
both to input goods and input services or, as it has
legislated, input goods alone. By its clear
stipulation that a refund would be admissible only
where the unutilised ITC has accumulated on account of
the rate of tax on inputs being higher than the rate
of tax on output supplies, Parliament has confined the
refund in the manner which we have described above.
While recognising an entitlement to refund, it is open
to the legislature to define the circumstances in
which a refund can be claimed. The proviso to Section
54(3) is not a condition of eligibility (as the
assessees' the counsel submitted) but a restriction
which must govern the grant of refund under Section
54(3). We, therefore, accept the submission which has
been urged by Mr N. Venkataraman, learned ASG.”
(56) Thus, the Supreme Court has held that the claim
of refund cannot be asserted as a constitutional
right, since refund is a statutory prescription.
We may at this stage refer that FORM GST-ITC-02
under Rule 41(1) of the CGST Rules, 2017 enables
the transfer of unutilized ITC in the case of
amalgamation. The condition precedent is that
the entities being acquired or transferred must
have ITC available in its electronic credit
ledger from the date of merger, acquisition,
combination, lease, or transfer. Both the
transferee and the transferor must be registered
under the GST. All pending transactions related
to the merger must be accepted, rejected, or
modified, and all liabilities of transferor’s
filed returns must be paid. The transfer of
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business must include the transfer of
liabilities, including any unpaid taxes,
litigation, or recovery cases. This transfer
must be accompanied by a Chartered or Cost
Accountant’s certificate.
(57) Though, there is no time limit prescribed for
filing FORM GST-02, however, keeping in mind the
above statutory time limits, it is mandatory
that the same are observed and followed. As held
by us there is violation and disregard to the
statutory provisions. All the formalities of
transfer of unutilized ITC are required to be
completed within the time specified in order to
avoid further complications on amalgamations of
the entities. In the instant case, the action of
registration and cancellation of registration is
at odds on with the settled legal precedent that
the amalgamating entity ceases to exist upon the
approved scheme of amalgamation.
(58) Pertinently, FORM ITC-02 requires to mention the
GSTIN of both the transferor-company and
transferee-company. In other words, the
Transferor Company should have a valid
registration on the date of transfer of
unutilized Input Tax Credit. The petitioner-ATIL
has obtained Registration No.24AAJCA1167G1ZX
(for Gujarat) on 21.12.2025 w.e.f. 25.05.2023.
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The registration of ARTIPL was cancelled on
29.11.2024. FORM GST ITC-2 was transferred on
20.10.2023 by the ARTIPL for unutilized credit.
All pending liabilities, interests etc., were
required to be addressed and settled by the
transferor-ARTIPL during the transition period.
(59) The Supreme Court in the case of Safari Retreats
Private Limited & Ors. (supra) has prescribed
the parameters in interpretation of the taxing
statutes. They are as below:
“RULES REGARDING THE INTERPRETATION OF TAXING STATUTES
25. Regarding the interpretation of taxation statutes,
the parties have relied on several decisions. The law
laid down on this aspect is fairly well-settled. The
principles governing the interpretation of the
taxation statutes can be summarised as follows:
a. A taxing statute must be read as it is with no
additions and no subtractions on the grounds of
legislative intendment or otherwise;
b. If the language of a taxing provision is plain, the
consequence of giving effect to it may lead to some
absurd result is not a factor to be considered when
interpreting the provisions. It is for the legislature
to step in and remove the absurdity;
c. While dealing with a taxing provision, the
principle of strict interpretation should be applied;
d. If two interpretations of a statutory provision are
possible, the Court ordinarily would interpret the
provision in favour of a taxpayer and against the
revenue;
e. In interpreting a taxing statute, equitable
considerations are entirely out of place;
f. A taxing provision cannot be interpreted on any
presumption or assumption;
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g. A taxing statute has to be interpreted in the light
of what is clearly expressed. The Court cannot imply
anything which is not expressed. Moreover, the Court
cannot import provisions in the statute to supply any
deficiency;
h. There is nothing unjust in the taxpayer escaping if
the letter of the law fails to catch him on account of
the legislatures failure to express itself clearly;
i. If literal interpretation is manifestly unjust,
which produces a result not intended by the
legislature, only in such a case can the Court modify
the language;
j. Equity and taxation are strangers. But if
construction results in equity rather than injustice,
such construction should be preferred;
k. It is not a function of the Court in the fiscal
arena to compel the Parliament to go further and do
more;
l. When a word used in a taxing statute is to be
construed and has not been specifically defined, it
should not be interpreted in accordance with its
definition in another statute that does not deal with
a cognate subject. It should be understood in its
commercial sense. Unless defined in the statute
itself, the words and expressions in a taxing statute
have to be construed in the sense in which the persons
dealing with them understand, that is, as per the
trade understanding, commercial and technical practice
and usage.”
(60) The principles enunciated in paragraph Nos.‘a’,
‘c’, ‘e’, ‘f’ and ‘g’ will apply in the present
case. The Apex Court has cautioned that while
dealing with a taxing provision, the principle
of strict interpretation should be applied; and
in interpreting a taxing statute, equitable
considerations are entirely out of place.
Further, it is held that a taxing provision
cannot be interpreted on any presumption or
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assumption; and a taxing statute has to be
interpreted in the light of what is clearly
expressed, and the Court cannot imply anything
which is not expressed, and finally, the Court
cannot import provisions in the statute to
supply any deficiency.
(61) In the instant case, the petitioner-ATIL, which
is a new identity wants to claim refund of
remainder / part of unutilized tax credit under
Section 54(3) of the CGST Act, 2017 for making
exports falling under zero rated supplies by
erstwhile ARTIPL. It is pertinent to note that
the erstwhile ARTIPL in FORM GST ITC-02 on
20.10.2023 transferred the ITC in part while
keeping remainder of unutilized ITC. Thereafter,
erstwhile ARTIPL filed refund application under
Section 54(3) of the CGST Act, 2017 on
04.01.2024 under the category of “ITC
accumulated due to Exports of Goods / Services-
without payment of Tax”, which was allowed by
the competent authority vide order dated
28.02.2024. It is the case of the petitioner-
transferee ATIL, that since ARTIPL has
amalgamated, the remainder of unutilized credit
of zero rated export under Section 54(3) of the
CGST Act, 2017 of goods may be allowed, as all
the rights and liability of ARTIPL are now of
ATIL.
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(62) The fate of the writ petitions primarily hinges
on the submissions of the petitioner ATIL on
twin grounds, (a) That the ARTIPL was in
existence till 29.11.2024 (date of cancellation
of its registration), and (b) The ATIL got
registered w.e.f 25.03.2023 vide certificate
dated 21.12.2025. It is true that on
amalgamation of three entities into the
petitioner – ATIL, the business and the
adventure of ARTIPL will not seize to exist, and
it would get transferred to ATIL as per the
sanctioned scheme, despite its (ARTIPL)
existence as an entity seizes to exist, but
ARTIPL while applying for transfer of unutilized
credit FORM GST ITC-02 on 20.10.2023, only
transferred it in part, and later on sought to
seek refund. It is contended that since the
provision of Section 18(3) of the CGST Act, 2017
and Rule 41 of the CGST Rules, 2017, the words
“transfer” and “unutilized input tax credit”,
gives discretion to transfer part of it in
electronic credit ledger, hence it only
transferred in part(approx.80%) to the
transferee - ATIL, to be claimed as refund later
on for the remaining. We do not agree with the
interpretation canvassed by the petitioner,
since the erstwhile ARTIPL was never restricted
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in transferring the entire unutilized ITC
through FORM GST ITC-02. Section 18(3) of the
CGST Act, 2017 uses the line “shall be allowed
to transfer the input tax credit which remains
unutilized” and in Rule 41(1) of the CGST Rules,
2017, it is stated as “a request for transfer of
unutilized input tax credit lying in his
electronic credit ledger to the transferee which
remains unutilized in his electronic credit
ledger”, is required to be construed in its
fundamental sense, when the transfer of
unutilized ITC relates from an amalgamated
entity to new business entity. Principle ‘a’ of
the decision in the case of Safari Retreats
Private Limited & Ors. (supra) does not permit
the interpretation of the statutory provision as
canvassed. It is directed by the Apex Court vide
principle ‘a’ that “A taxing statute must be
read as it is with no additions and no
subtractions on the grounds of legislative
intendment or otherwise”. In the cases of
amalgamation, when a new entity is formed, and a
mechanism is prescribed by the statute for
transferring the unutilized ITC vide FORM GST
ITC-02 in the business interest of the new
entity, the intention of such enabling provision
cannot be used in a manner, which frustrates the
transfer of unutilized credit of ITC on
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amalgamation as done by the transferor-ARTIPL
and as pursued by petitioner, transferee-ATIL.
(63) Principle (b) laid down by the the Apex Court in
the case of Safari Retreats Private Limited &
Ors. (supra) decision directs that “If the
language of a taxing provision is plain, the
consequence of giving effect to it may lead to
some absurd result is not a factor to be
considered when interpreting the provisions. It
is for the legislature to step in and remove the
absurdity;”. Thus, the said principle squarely
applies to the facts of the instant case. The
transfer of partial unutilized ITC by
transferor-ARTIPL to ATIL has resulted to an
absurd result. After partial transfer of
unutilized ITC on zero rated supply of exports
by erstwhile ARTIPL, which was accepted by ATIL;
ARTIPL applied for refund of ITC, on 04.01.2024,
after effective date of 22.09.2023. The reason
assigned by ARTIPL and as recorded in the
impugned order, is that “ARTIPL has not
transferred the ITC of Rs.49.14 Cr. out of ITC
of Rs.242.02 Cr. to the transferee-ATIL as they
have to claim the refund of accumulated ITC
which would not have been allowed to them in M/s
Altsom Transport India Ltd.” The reason
assigned by ARTIPL falls in line with the
statutory provisions, since the zero rated
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supply of exports was done by erstwhile ARTIPL,
and the benefits of such exports in the form of
ITC can be reaped by ATIL only in the manner as
provided under the statute. Thus, after the
amalgamation, erstwhile entity ARTIPL continued
filing their GSTR-3B returns and availed ITC,
albeit its entity existed till the effective
date as per Section 87(2) of the CGST Act, 2017.
(64) The consequences and effect of amalgamation on
the transferor and transferee of corporate
entity has been crystallized by the Supreme
Court in the case of Principal Commissioner of
Income Tax [CENTRAL]-2 vs. Mahagun Realtors (P)
Ltd., (2022) 19 S.C.C. 1, wherein the Apex Court
has held thus:
“19. Amalgamation, thus, is unlike the winding up of a
corporate entity. In the case of amalgamation, the
outer shell of the corporate entity is undoubtedly
destroyed; it ceases to exist. Yet, in every other
sense of the term, the corporate venture continues —
enfolded within the new or the existing transferee
entity. In other words, the business and the adventure
lives on but within a new corporate residence i.e. the
transferee company. It is, therefore, essential to
look beyond the mere concept of destruction of
corporate entity which brings to an end or terminates
any assessment proceedings. There are analogies in
civil law and procedure where upon amalgamation, the
cause of action or the complaint does not per se cease
— depending of course, upon the structure and
objective of enactment. Broadly, the quest of legal
systems and courts has been to locate if a successor
or representative exists in relation to the particular
cause or action, upon whom the assets might have
devolved or upon whom the liability in the event it is
adjudicated, would fall.
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xxx xxx xxx
31. The combined effect, therefore, of Section 394(2)
of the Companies Act, 1956, Section 2(1-A) and various
other provisions of the Income Tax Act, is that
despite amalgamation, the business, enterprise and
undertaking of the transferee or amalgamated company,
which ceases to exist, after amalgamation, is treated
as a continuing one, and any benefits, by way of carry
forward of losses (of the transferor company),
depreciation, etc., are allowed to the transferee.
Therefore, unlike a winding up, there is no end to the
enterprise, with the entity. The enterprise in the
case of amalgamation, continues.”
(65) Thus, only if the issue of registrations of
both the entities, was undertaken as
prescribed by the statutory provisions, there
was no impediment to claim the refund of
unutilized ITC by ATIL, in which the rights,
interest, liabilities of ARTIPL got
transferred. The rights and liabilities of
ITC of ARTIPL got crystallized on the zero
rated export of goods resulting into the ITC
in its electronic ledger. Indubitably, on
amalgamation and formation of ATIL, the only
and exclusive manner to transfer the
unutilized ITC from its electronic ledger was
through FORM GST ITC-02, which it resorted
to, but only in substantial part, i.e, almost
80%. The petitioner ATIL was entitled to
claim the entire unutilized ITC of ARTIPL and
also encash it, if it was transferred by
following the statute, since ATIL could not
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have claimed it any manner since, it never
exported the goods. Hence, we do not find
that respondent No.1, while passing the
Order-in-Appeal dated 08.01.2025, has
committed any patent illegality in exercising
his power under section 107 of the CGST Act,
2017.
(66) As noticed by us, hereinabove, the action of
both the entities and the Jurisdictional
Officer is pernicious to the statutory
provisions, and this Court cannot turn a
blind eye to the illegality/irregularity
committed by them, which ultimately abetted
the amalgamated entities. In view of the
Doctrine of Pari Delicto (in equal fault),
the law aids neither party. Thus, erstwhile
ARTIPL cannot seek any benefit of refund from
the fault of the Jurisdictional Officer when
it is equally at fault. Correspondingly, at
this stage, ATIL cannot be allowed to claim
refund of unutilized credit which was lying
in the electronic ledger of ARTIPL since the
statute does not permit the course suggested
by petitioner-ATIL.
(67) Though various citations are referred to this
Court, we find that the same are either
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irrelevant or repetitive and hence, we are
dealing with few of them as under:
(68) The reliance placed in the judgement of the
Apex Court in the case of Mother Superior
(supra) by the petitioner is misconceived
since the Apex Court was dealing with the
provisions of exemptions contained in the
Kerala Building Tax Act, 1975 and the Apex
Court in this regard has held that
beneficiary exemptions are to be considered
in light of the object sought to be achieved
by the provision and such statute has to be
construed in accordance with such object.
(69) Reliance is also placed on the judgement of
this Court in the cases of Macrowagon Retail
Pvt. Ltd. And Anr. (supra) and VKC Footsteps
India Pvt. Ltd. (supra) as well the judgement
of the Karnataka High Court in the case of
Tonbo Imaging India Pvt. Ltd. (supra). The
ratio laid down by the judgement in the case
of Ramji Lal Bagla and Ors. (supra) and in
the case of Hari Vishnu Kamath (supra) will
not apply in contest of the specific rules in
the present case, which prescribe the
limitation. The Apex Court, in light of the
provisions of the Representation of the
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People (Conduct of Elections and Election
Petitions) Rules, 1951. In the case of Hari
Vishnu Kamath (supra), the Apex Court has
held that enactment in form mandatory might
in substance to be directory and use of word
‘shall’ does not conclude the matter. The
relevant rule has been interpreted by the
Apex Court with regard to rejection of the
ballet paper.
(70) Similarly in the case of Ramji Lal Bagla and
Ors. (supra), the Apex Court while
considering the provisions of Punjab Town
Improvement Act, 1992 relating to the
acquisition of land and while dealing with
the provisions of Section 44A of the said
Act, has held that absence of resultant
consequences of non-compliance with the
statute will only conclusively make such
statute as directory notwithstanding the use
of expression “shall”. The ratio of the cited
judgements will not apply to the foregoing
issue and the statutory provisions since they
mention and use the word “shall” and also
mandate and direct to take necessary steps
within limitation period/time limit
prescribed therein. Thus, none of the case
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laws cited by the petitioner will come to its
rescue in light of the peculiar facts and the
statutory provisions governing the issue
raised in the instant writ petitions.
:: FINAL ORDER ::
(71) As we have already noticed the flawed
approach by the Jurisdictional Officer/s in
dealing the cancellation of registration of
the transferee - ARTIPL and the registration
of the transferor ATIL; we direct the Revenue
to issue appropriate directions /
instructions for scrupulously following the
mandate of statutory provisions while dealing
with the registrations of both the entities
in case of amalgamation in order to avoid
future complication. Appropriate instructions
are also required to be issued for taking
prompt steps within the time frame as soon as
the Jurisdictional Officer comes to know
about the fact of amalgamation of the
entities.
(72) On an overall analysis of the facts,
statutory provisions and the case laws, the
writ petitions fail legal scrutiny, hence we
restrain ourselves from interfering with the
impugned orders. The writ petitions stand
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dismissed. Rule discharged. No order as to
costs.
Sd/- .
(A. S. SUPEHIA, J)
Sd/- .
(PRANAV TRIVEDI,J)
***
Bhavesh-[PPS]* / Sr. No.1-7
Original copy of this order has been signed by the Hon'ble Judges.
Digitally signed by: BHAVESH PARSOTTAM KATIRA(HC00176), PRINCIPAL PRIVATE SECRETARY, at High Court of Gujarat on 23/01/2026 14:58:11
Page 55 of 55
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