An NCLT scheme changes the legal identity of the entity that carries on the business. The transferor company ceases to exist, and the transferee company continues the business. For GST purposes, the transferor’s registration must be cancelled, and the transferee must obtain a fresh registration or amend its existing registration to include the transferred business.
The Cancellation and the Fresh Registration
The Gujarat High Court has held that once a scheme of amalgamation is approved by the NCLT, the statute mandates strict compliance with the GST provisions, including the cancellation of the GST registration of the amalgamating entities and the fresh registration of the amalgamated entity. The cancellation and the fresh registration must be coordinated with the NCLT order and the appointed date.
The ITC Transfer
Section 18(3) of the CGST Act read with Rule 41 allows the transferor to pass the unutilised input tax credit to the transferee in Form GST ITC-02. The Gujarat High Court has held that the ITC cannot be denied merely because the transferor and the transferee are located in different States. The transfer is conditional on the transfer of the liabilities, and the transferee must accept the transfer in the common portal.
The Proceedings Against the Dissolved Entity
The Bombay High Court has held that once the NCLT sanctions the amalgamation, the transferor company ceases to exist, and any GST proceedings initiated or continued against it are void ab initio. The tax authorities must initiate the proceedings against the transferee company, which steps into the shoes of the transferor.
A technically sound GST transition plan addresses the cancellation, the fresh registration, the ITC transfer, and the notification of the tax authorities.
Call to Action
Anuj Desai & Associates advises companies on the GST registration aspects of an NCLT scheme—from the cancellation and the fresh registration to the ITC-02 transfer and the defence against proceedings against a dissolved entity. If you are implementing a scheme, we can help you manage the GST transition.
📧 office@anujdesaiassociates.com
📞 9619456656
🌐 https://anujdesaiassociates.com
🔗 linkedin.com/in/ca-anuj-desai-122547230
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