Amalgamation - GST Liability and implications

[Rohit K]

Sir,

'A' company has been amalgamated into 'B' company in the year 24 August 2020 and the order has been issued by NCLT. Since 'A' Company had some issues (COVID period) in the transfer of some company licenses, they continued to conduct business and file GST returns after amalgamation.

As per the section 87(2) of CGST Act, '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.'

As per the above section, it is understood that the GST registration of 'A' company is cancelled wef 24 August 2020. But the company 'A' is still conducting business and issuing invoices and fililing returns.

1. Whether the ITC claimed by the Company 'A' is to be disallowed ?

2. Whether the tax liability discharged by the Company 'A' is valid?

AI Summary

Amalgamation Confusion: Company 'A' Faces ITC Claim Issues Post-Merger; Experts Advise Disclosure to Avoid Penalties A company, 'A', was amalgamated into 'B' on August 24, 2020, per an NCLT order, leading to the cancellation of 'A's GST registration. Despite this, 'A' continued business operations, filed GST returns, and claimed Input Tax Credit (ITC). The discussion addresses whether 'A's ITC claims and tax liabilities are valid post-amalgamation. Experts suggest these actions may lead to litigation, as 'A' should not exist post-amalgamation. They recommend disclosing the situation to GST authorities to avoid penalties, emphasizing that procedural lapses occurred without intent to evade taxes. The situation requires regularization to resolve compliance issues.