GST registration status and Balance in ECL in case of merger

[SAFETAB LIFESCIENCE]

Dear Experts,

Please clarify the following points.

1. A partnership firm namely X is taken by a Private Limited Company Y as going concern by taking of business assets and liabilities of X. Both are in different states. After merger/taking over, X will be working in the place where it is already there in the name of X (a unit of Y).

2. What will be GST registration status. What X to do ? To surrender or to amend ?? At what stage this is to be done ??? According to me GST number will be changed and it will be in PAN based of Y.

3. How the closing balance in Electronic ledger can be transferred to buyer's company ledger.

We shall be highly obliged if you could kindly clarify the above please.

[Ganeshan Kalyani]

Sir, your view is correct. The GSTIN is PAN based hence X will have to surrender its GSTIN. Y (X becomes Y's business) has to take registration in the State in which X was operating business.

[YAGAY andSUN]

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, Substituted vide Notf no. 22/2017 – CT dt 01.07.2017 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.

AI Summary

Partnership Firm X Must Surrender GSTIN Post-Merger; Unutilized ITC Transfer via FORM GST ITC-02 Required A partnership firm, X, was acquired by a private limited company, Y, with both entities located in different states. Post-merger, X will operate as a unit of Y. Queries were raised regarding the GST registration status and the transfer of the electronic credit ledger (ECL) balance. It was clarified that X must surrender its GSTIN, and Y should register in the state where X operates. The transfer of unutilized input tax credit should be done using FORM GST ITC-02, with details furnished electronically, and a certificate from a chartered accountant confirming the transfer of liabilities is required.