In one of the cases, company was converted into LLP in July 2019. The company had certain unclaimed ITC for FY 2018-19 which it had decided to claim by Sep 2019 returns.
However, upon conversion, the unclaimed ITC was claimed in the GSTR-3B for Sep 2019 of the succeeding LLP. Section 18 r.w. Rule 41 prescribes that upon succession, the ITC may be t/f to succeeding entity by way of filing of ITC-02 by previous entity. The actions of the company appear to be contrary to the provisions.
Is there any alternate remedy to the same or would the ITC be deemed ineligible in hands of the LLP?
Company's LLP Conversion Results in Ineligible ITC Claim Due to Non-compliance with Section 18 and Rule 41 Procedures A company converted into an LLP in July 2019 had unclaimed Input Tax Credit (ITC) from FY 2018-19, which it intended to claim by September 2019. However, the ITC was claimed by the LLP in its GSTR-3B for September 2019, contrary to Section 18 read with Rule 41, which requires the filing of ITC-02 for ITC transfer to the succeeding entity. The response indicates that the LLP was not entitled to claim the ITC, as it belongs to the original company. The procedural lapse means the ITC cannot be reversed or transferred, rendering it ineligible for the LLP. (AI Summary)
TaxTMI 
TaxTMI 
