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

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