In a significant ruling that sets a precedent for businesses operating across Indian states, the Bombay High Court (Goa Bench), in Umicore Autocat India Pvt. Ltd. vs. Union of India & Ors., upheld the right of a merged entity to transfer unutilized Input Tax Credit (ITC) from a company registered in Goa to one registered in Maharashtra.
This judgment strikes at the heart of GST implementation issues, particularly around cross-state credit transfer during mergers and amalgamations—a long-standing grey area in India’s indirect tax framework.
Case Background
• Petitioner: Umicore Autocat India Pvt. Ltd., Maharashtra (Transferee)
• Transferor: Umicore Anandeya India Pvt. Ltd., Goa
• Amalgamation Date: As per NCLT order dated 26.05.2020, effective from 01.04.2019
• ITC Sought to be Transferred:
• IGST: ?3,69,586
• CGST: ?3,52,84,105
• SGST: ?1,39,285
When the Transferor attempted to transfer ITC using Form ITC-02, the GST portal blocked the request, citing:
“Transferee and Transferor should be of the same State/UT.”
This prompted the petitioner to approach the court, challenging the GSTN system restriction as contrary to the GST Act and Rules.
Key Legal Provisions Involved
• Section 18(3) of the CGST Act, 2017: Permits transfer of unutilized ITC during merger/amalgamation.
• Rule 41 of the CGST Rules, 2017: Lays down the procedure to effect such transfers via Form GST ITC-02.
• Section 25(4): Defines each registration in different states as a “distinct person,” often cited to block cross-state transfers.
Arguments in Court
Petitioner:
• No restriction in Section 18(3) or Rule 41 on inter-state ITC transfers.
• NCLT-approved amalgamation made the transferee liable for all assets and liabilities, including ITC.
• Blocking transfer due to GSTN logic violates the statute and constitutional principles (Articles 269-A and 289).
• Cited an Advance Ruling supporting cross-state ITC transfer post-merger.
Government (Goa & Centre):
• Argued that each GST registration is state-specific, and hence, ITC must be consumed within that state.
• Relied on an earlier Madras High Court decision (MMD Heavy Machinery).
• Claimed system limitations and lack of mechanism for cross-state transfer as a valid constraint.
High Court Verdict
The Court allowed the ITC transfer and ruled:
• No restriction under Section 18(3) or Rule 41 prevents ITC transfer across states post-amalgamation.
• GST portal logic cannot override the statute.
• System limitations or circulars cannot deny substantive legal rights.
• Transferor’s SGST claim was voluntarily given up to prevent state revenue loss.
Direction Issued: Transfer IGST and CGST ITC to the Petitioner via physical/manual mode pending system updates. GST Council and GSTN were also urged to revise their systems accordingly.
GST Case Law Umicore Autocat India Private Limited Versus Union of India
Citation-2025 TAXONATION 1784 (BOMBAY)(Click here ot read full judgement)
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