Transfer of ITC upon conversion of company

[ROHIT GOEL]

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?

AI Summary

Transfer of Input Tax Credit: successor entity claiming ITC must follow ITC-02 transfer mechanism or face time-barred procedural issues.
The unclaimed Input Tax Credit belonged to the company as the pre-conversion registered person and, under Section 18 read with Rule 41, may be transferred to a successor only by filing Form ITC-02 by the transferor. The successor LLP's independent claim in its post-conversion return bypassed the transfer mechanism and, given the absence of the original registered person and time-bar constraints, reversal or proper transfer by the transferor is practically foreclosed.