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 and GST registration cancellation: post order supplies and ITC are treated as those of the surviving entity, requiring regularisation.
Amalgamation causes the transferor's GST registration to be treated as cancelled from the amalgamation order date under Section 87(2), so post order supplies, ITC claims and tax filings made in the transferor's name should be regarded as transactions of the transferee; revenue action for those transactions would ordinarily lie against the transferee, and issues of ITC entitlement and proper accounting require administrative regularisation and possible adjudication.