TaxTMI 
TaxTMI 
2026 (1) TMI 1337
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....logously by this common judgment. FACTS: (2) Special Civil Application No. 11025 of 2025 is taken as a lead matter. (3) The captioned writ petitions are filed by the petitioner - Alstom Transport India Ltd. (ATIL), seeking quashing and setting aside the Orders-in-Appeal dated 08.01.2025 passed by respondent No. 1-Additional Commissioner, CGST & Central Excise (Appeals), Vadodara, passed under Section 107(11) of the Central Goods and Service Tax, 2017 (hereinafter referred to as "the CGST, Act, 2017") allowing the appeal filed by respondent No. 2 - Assistant Commissioner, CGST & Central Excise, Division-V, Vadodara-II, against the Refund Sanction Orders dated 28.02.2024 passed by respondent No. 3, Deputy Commissioner, CGST & Central Excise, Division-V, Vadodara-II, in FORM RFD-06. (4) The identity of the petitioner - Company emanates from the order dated 10.08.2023, passed by the National Company Law Tribunal (NCLT) dissolving three entities - (i) Alstom Rail Transportation India Pvt. Ltd. (ARTIPL), (ii) Alstom Manufacturing India Pvt. Ltd. (AMIPL), and (iii) Alstom System India Pvt. Ltd. (ASIPL), and sanctioning their amalgamation into the ....
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.... Order-in-Review Order on 29.07.2024, directing the Respondent No. 3, to file an appeal in FORM GST APL-03 for the period from 01.04.2023 to 30.04.2023. (11) Accordingly, respondent No. 3 preferred an appeal against the ARTIPL, which came to be allowed vide order dated 08.01.2025 setting aside the order granting refund, which has giving a cause to file the captioned writ petitions. (12) It appears that, during the aforesaid proceedings of refund, a show cause notice dated 07.11.2024 was issued to the ARTIPL proposing cancellation of its GST registration. The said show cause notice was adjudicated by an order dated 29.11.2024, whereby the GST registration of the ARTIPL came to be cancelled. In the said order, it was specifically provided that the effective date of cancellation of registration would be 29.11.2024. (13) Thus, from a perusal of the aforementioned key dates, it can be noticed that even though the ARTIPL was dissolved and amalgamated into the petitioner vide order of the NCLT dated 10.08.2023, certified copy of which was filed with the RoC on 22.09.2023, and intimation of which was given to the respondents on 10.10.2023, until 29.11.2024 the ARTIPL existed as a ....
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.... where the export of goods is subject to export duty, or where the claimant has availed drawback in respect of such goods. Thus, it is submitted that the statutory and substantive right to claim refund flows from Section 16(3) of the IGST Act, 2017, and a fundamental precondition for the accrual of such right is that the zero-rated supply must be made by a registered person. Section 16(3) clearly postulates that, on the date of making the zero-rated supply, the claimant of the refund must be a registered person. (19) It is contended that in the present case, the ARTIPL had effected exports in the month of April 2023, at which point in time it had neither undergone amalgamation nor had its registration been cancelled. It had, therefore, fulfilled all the substantive preconditions for claiming refund of unutilized ITC. Consequently, upon effecting such exports, a vested and enforceable right to claim refund accrued in favour of the ARTIPL under Section 16(3) of the IGST Act, 2017. (20) With regard to the Legislative policy underlying special treatment to exports by grant of refunds (particularly refund of unutilized ITC) and its relevance to the present case, it is contended th....
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.... effected, the entire quantum of unutilized ITC must necessarily be transferred. (25) It is submitted that the expression "transfer of the entire unutilized ITC" is conspicuously absent both in Section 18(3) of the CGST Act, 2017 as well as in Rule 41 of the CGST Rules, 2017. Hence, in such circumstances, to read into Section 18(3) of the CGST Act, 2017 a requirement of compulsory transfer of the entire unutilized ITC would amount to judicial legislation, which is impermissible in law in view of settled principles of statutory interpretation. In this regard, reliance is placed on the decision of the Supreme Court in the case of Padmasundara Rao & Ors. vs. State of T.N. & Ors., (2002) 3 S.C.C. 533. (26) In a situation where a transferor chooses not to transfer any part of its unutilized ITC to the transferee company pursuant to an amalgamation, there exists no provision under the CGST Act, 2017 which empowers the authorities to compel such transfer or to take any punitive action for non-transfer, which itself, demonstrates that both the decision to transfer ITC and the quantum of ITC to be transferred lie entirely within the domain of the transferor, and the Revenue has no rol....
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....equire a Transferor Company to transfer its entire unutilized credit, then nothing stopped the Legislature in incorporating the word "transfer of entire unutilized credit" in Rule 41(1) of the CGST Rules, 2017 or Section 18(3) of the CGST Act, 2017. (30) While dealing with the objections raised by the revenue, for the alleged violation of Section 87(2) of the CGST Act, 2017, it is contended that in so far as Section 87(2) of the CGST Act, 2017 is concerned, the said provision contemplates that from the date of the NCLT order, the registration certificate of the amalgamating company is liable to be cancelled. However, since the power and responsibility to cancel registration is statutorily vested in the respondent Department and not in the petitioner, the provision does not mandate that the transferor must necessarily apply for cancellation of registration prior to or upon the effective date of the NCLT order. Hence, no such obligation can be foisted upon the transferor in the present case, and that apart, considering the fact that the respondent-Department was duly intimated of the amalgamation as early as on 10.10.2023, the authorities ought to have initiated proceedings for ca....
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.... the law governing the zero-rated supplies. SUBMISSIONS ON BEHALF OF THE RESPONDENTS: (33) Learned Senior Standing Counsel Mr. Param Shah has made the following submissions. (34) It is a settled principle of law that a taxing statute must be construed strictly on the basis of what is expressly provided therein, and that neither any addition or subtraction, nor any presumption or assumption, can be made beyond the clear language of the statute. In support of the said submission, the respondents have placed reliance upon the judgment of the Supreme Court in the case of Chief Commissioner of Central Goods and Service Tax & Ors. vs. M/s. Safari Retreats Private Limited & Ors., 2024 INSC 756, wherein the Supreme Court has succinctly reiterated the settled principles governing the interpretation of taxing statutes. (35) Reference is made to the provisions of Sections 18 and 87 of the CGST Act, 2017 read with Rule 41 of the CGST Rules, 2017, and it is submitted that a conjoint and harmonious reading of the said provisions leaves no manner of doubt that, in the event of amalgamation, the unutilized Input Tax Credit of the erstwhile company can be transferred to the transferee c....
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.... filed FORM GST REG-1 under Rule 8 of the CGST Rules, 2017 on 10.05.2023 in anticipation of the NCLT order. e) It was registered w.e.f 25.5.2023 vide certificate issued on 21.12.2025. f) Intimation by ARTIPL of amalgamation on 10.10.23 to authorized officer. g) Show-cause notice for cancellation of registration of the ARTIPL issued on 07.11.2024. h) The ARTIPL registration cancelled w.e.f 29.11.2024 from the said date. i) Amount of Rs.192.88 Cr. was claimed through FORM GST ITC-02 by the ARTIPL on 20.10.2023 of unutilized ITC. j) Refund Sanctioned Order FORM GST RFD-06 passed on 28.02.2024 of Rs. 2,56,75,437/- of granting the ITC in favour of the ARTIPL. k) Order dated 08.01.2025 passed in Appeal under Section 107(11) of the CGST Act, 2017 cancelling the refund sanction order dated 28.02.2024. ISSUE OF REGISTRATION OF THE PETITIONER-ATIL AND ERSTWHILE ARTIPL ON AMALGAMATION : (41) Keeping in mind the aforementioned dates, registration / cancellation of respective ARTIPL and AITL respectively and in order to appreciate the rival contentions, it will be necessary to have a closer look to the statutory provisions of ....
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....demerger of two or more companies pursuant to an order of a High Court, Tribunal or otherwise, the transferee shall be liable to be registered, with effect from the date on which the Registrar of Companies issues a certificate of incorporation giving effect to such order of the High Court or Tribunal. Explanation: For the purposes of this section, - (i) the expression "aggregate turnover" shall include all supplies made by the taxable person, whether on his own account or made on behalf of all his principals; (ii) the supply of goods, after completion of job-work, by a registered job-worker shall be treated as the supply of goods by the principal referred to in section 143, and the value of such goods shall not be included in the aggregate turnover of the registered job-worker; (iii) the expression "special category States" shall mean the States as specified in sub-clause (g) of clause (4) of article 279A of the Constitution [except the State of Jammu and Kashmir] [and States of Arunachal Pradesh, Assam, Himachal Pradesh, Meghalaya, Sikkim and Uttarakhand]. SECTION 25 : Procedure for registration (1) Every person who is liable t....
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....to be registered under the Act, but fails to do so, without prejudice to any action which may be taken under the Act. The consequence of not registering is prescribed in Section 122(xi) of the CGST Act, 2017, which is payment of penalty of ten thousand. (45) Now, for examining the facet of cancellation of transferor - ARTIPL, the relevant provisions which are to be kept in mind are Section 29 of the CGST Act, 2017, and Rules 20 and 22 of the CGST Rules, 2017. The same are as under: "SECTION 29 : Cancellation "or suspension" of registration : (1) The proper officer may, either on his own motion or on an application filed by the registered person or by his legal heirs, in case of death of such person, cancel the registration, in such manner and within such period as may be prescribed, having regard to the circumstances where, (a) the business has been discontinued, transferred fully for any reason including death of the proprietor, amalgamated with other legal entity, demerged or otherwise disposed of; or (b) there is any change in the constitution of the business; or (c) the taxable person, other than the person registered under sub-se....
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....) of section 29 shall electronically submit an application in FORM GST REG-16, including therein the details of inputs held in stock or inputs contained in semi-finished or finished goods held in stock and of capital goods held in stock on the date from which the cancellation of registration is sought, liability thereon, the details of the payment, if any, made against such liability and may furnish, along with the application, relevant documents in support thereof, at the common portal within a period of thirty days of the occurrence of the event warranting the cancellation, either directly or through a Facilitation Centre notified by the Commissioner: RULE 22 : Cancellation of registration (1) Where the proper officer has reasons to believe that the registration of a person is liable to be cancelled under section 29, he shall issue a notice to such person in FORM GST REG-17, requiring him to show cause, within a period of seven working days from the date of the service of such notice, as to why his registration shall not be cancelled." (46) Section 29 of the CGST Act, 2017 empowers the proper officer to cancel the registration on his own motion or on an appli....
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....fically that the ARTIPL has amalgamated into the ATIL and it would like to contest the proposed cancellation, and sought 30 days time and the refund application was under process. Thereafter, it appears that after affording personal hearing to the representatives of the petitioner, the Superintendent passed an order FORM GST REG-19 dated 29.11.2024, cancelling the registration of the ARTIPL, making it effective from the even date. Thus, the GST registration of ARTIPL was cancelled w.e.f. 29.11.2024. (48) The petitioner has attempted to take shelter under the expression used in Section 29(1) of the CGST Act, 2017 assigning power to proper officer to take suo motu action of cancellation of registration of the ARTIPL since it had intimated the Jurisdictional Officer vide communication dated 10.10.2023 about the details of amalgamation and the effective date of 22.09.2023. It is pertinent to note that in this communication the transferor - ARTIPL has categorically made the following statement: "Kindly consider this letter as an intimation regarding the NCLT sanctioned amalgamation and to inform your goodselves that the transferor company ARTIPL having GSTIN 24AAACA5584C1Z1 ....
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....-section (2) of Section 29 of the CGST Act, 2017 ends with the word "where" which prescribe the eventuality of clauses prescribed from (a) to (e), which is not the case of the petitioner. (50) At this stage, it would be apposite to refer to Section 87 of the CGST Act, 2017, which reads thus: "SECTION 87: Liability in case of amalgamation or merger of companies : (1) When two or more companies are amalgamated or merged in pursuance of an order of court or of Tribunal or otherwise and the order is to take effect from a date earlier to the date of the order and any two or more of such companies have supplied or received any goods or services or both to or from each other during the period commencing on the date from which the order takes effect till the date of the order, then such transactions of supply and receipt shall be included in the turnover of supply or receipt of the respective companies and they shall be liable to pay tax accordingly. (2) 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....
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.... within a period of 30 days from the date of passing of the NCLT order or receipt of certified copy or from the issuance of certificate by RoC. b) Cancellation of registration on 29.11.2024 of ARTIPL before the registration of ATIL. (vide order dated 21.12.2025 w.e.f 25.05.2023) in violation of instructions in FORM REG-16. c) Action of the Jurisdictional Officer in ignoring the communication dated 10.10.2023 written by erstwhile ARTIPL, and not initiating proceedings under Rule 22 of the CGST Rules, 2017. d) Issuance of the show cause notice dated 07.11.2024 to ARTIPL after one year by the Jurisdictional Officer. e) Cancellation of registration of erstwhile ARTIPL on and w.e.f. 29.11.2024, instead of date of order of NCLT or from the date of issuance of certificate by RoC. f) Filing of FORM GST-REG-1 under Rule 8(5) of the CGST Rules, 2017 by transferee-ATIL for its registration on 10.05.2023 before the order passed by NCLT on 10.08.2023, and issuance of its incorporation by RoC on 22.09.2023 resulting into violation of provisions of Section 25. g) Failure to take steps for registration of ATIL as per the provision of sub-sectio....
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.... if any, paid on such tax or any other amount paid by him, may make an application before the expiry of two years from the relevant date in such form and manner as may be prescribed: Provided that a registered person, claiming refund of any balance in the electronic cash ledger in accordance with the provisions of sub-section (6) of section 49, may claim such refund in the return furnished under section 39 in such manner as may be prescribed. xxx xxx xxx (3) Subject to the provisions of sub-section (10), a registered person may claim refund of any unutilised input tax credit at the end of any tax period: Provided that no refund of unutilised input tax credit shall be allowed in cases other than (i) zero rated supplies made without payment of tax; (ii) where the credit has accumulated on account of rate of tax on inputs being higher than the rate of tax on output supplies (other than nil rated or fully exempt supplies), except supplies of goods or services or both as may be notified by the Government on the recommendations of the Council: Provided further that no refund of unutilised input tax credit shall be allowed in ....
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....fter the expiry of one year from the date of issue of tax invoice relating to such supply. (3) Where there is a change in the constitution of a registered person on account of sale, merger, demerger, amalgamation, lease or transfer of the business with the specific provisions for transfer of liabilities, the said registered person shall be allowed to transfer the input tax credit which remains unutilised in his electronic credit ledger to such sold, merged, demerged, amalgamated, leased or transferred business in such manner as may be prescribed. RULE 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, 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 r....
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....ipulation that a refund would be admissible only where the unutilised ITC has accumulated on account of the rate of tax on inputs being higher than the rate of tax on output supplies, Parliament has confined the refund in the manner which we have described above. While recognising an entitlement to refund, it is open to the legislature to define the circumstances in which a refund can be claimed. The proviso to Section 54(3) is not a condition of eligibility (as the assessees' the counsel submitted) but a restriction which must govern the grant of refund under Section 54(3). We, therefore, accept the submission which has been urged by Mr N. Venkataraman, learned ASG." (56) Thus, the Supreme Court has held that the claim of refund cannot be asserted as a constitutional right, since refund is a statutory prescription. We may at this stage refer that FORM GST-ITC-02 under Rule 41(1) of the CGST Rules, 2017 enables the transfer of unutilized ITC in the case of amalgamation. The condition precedent is that the entities being acquired or transferred must have ITC available in its electronic credit ledger from the date of merger, acquisition, combination, lease, or transfer. Both t....
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....ge of a taxing provision is plain, the consequence of giving effect to it may lead to some absurd result is not a factor to be considered when interpreting the provisions. It is for the legislature to step in and remove the absurdity; c. While dealing with a taxing provision, the principle of strict interpretation should be applied; d. If two interpretations of a statutory provision are possible, the Court ordinarily would interpret the provision in favour of a taxpayer and against the revenue; e. In interpreting a taxing statute, equitable considerations are entirely out of place; f. A taxing provision cannot be interpreted on any presumption or assumption; g. A taxing statute has to be interpreted in the light of what is clearly expressed. The Court cannot imply anything which is not expressed. Moreover, the Court cannot import provisions in the statute to supply any deficiency; h. There is nothing unjust in the taxpayer escaping if the letter of the law fails to catch him on account of the legislatures failure to express itself clearly; i. If literal interpretation is manifestly unjust, which produces a result not in....
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....4(3) of the CGST Act, 2017 of goods may be allowed, as all the rights and liability of ARTIPL are now of ATIL. (62) The fate of the writ petitions primarily hinges on the submissions of the petitioner ATIL on twin grounds, (a) That the ARTIPL was in existence till 29.11.2024 (date of cancellation of its registration), and (b) The ATIL got registered w.e.f 25.03.2023 vide certificate dated 21.12.2025. It is true that on amalgamation of three entities into the petitioner - ATIL, the business and the adventure of ARTIPL will not seize to exist, and it would get transferred to ATIL as per the sanctioned scheme, despite its (ARTIPL) existence as an entity seizes to exist, but ARTIPL while applying for transfer of unutilized credit FORM GST ITC-02 on 20.10.2023, only transferred it in part, and later on sought to seek refund. It is contended that since the provision of Section 18(3) of the CGST Act, 2017 and Rule 41 of the CGST Rules, 2017, the words "transfer" and "unutilized input tax credit", gives discretion to transfer part of it in electronic credit ledger, hence it only transferred in part(approx.80%) to the transferee - ATIL, to be claimed as refund later on for the remaining.....
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....Cr. to the transferee-ATIL as they have to claim the refund of accumulated ITC which would not have been allowed to them in M/s Altsom Transport India Ltd." The reason assigned by ARTIPL falls in line with the statutory provisions, since the zero rated supply of exports was done by erstwhile ARTIPL, and the benefits of such exports in the form of ITC can be reaped by ATIL only in the manner as provided under the statute. Thus, after the amalgamation, erstwhile entity ARTIPL continued filing their GSTR-3B returns and availed ITC, albeit its entity existed till the effective date as per Section 87(2) of the CGST Act, 2017. (64) The consequences and effect of amalgamation on the transferor and transferee of corporate entity has been crystallized by the Supreme Court in the case of Principal Commissioner of Income Tax [CENTRAL]-2 vs. Mahagun Realtors (P) Ltd., (2022) 19 S.C.C. 1, wherein the Apex Court has held thus: "19. Amalgamation, thus, is unlike the winding up of a corporate entity. In the case of amalgamation, the outer shell of the corporate entity is undoubtedly destroyed; it ceases to exist. Yet, in every other sense of the term, the corporate venture continues - ....
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....Appeal dated 08.01.2025, has committed any patent illegality in exercising his power under section 107 of the CGST Act, 2017. (66) As noticed by us, hereinabove, the action of both the entities and the Jurisdictional Officer is pernicious to the statutory provisions, and this Court cannot turn a blind eye to the illegality/irregularity committed by them, which ultimately abetted the amalgamated entities. In view of the Doctrine of Pari Delicto (in equal fault), the law aids neither party. Thus, erstwhile ARTIPL cannot seek any benefit of refund from the fault of the Jurisdictional Officer when it is equally at fault. Correspondingly, at this stage, ATIL cannot be allowed to claim refund of unutilized credit which was lying in the electronic ledger of ARTIPL since the statute does not permit the course suggested by petitioner-ATIL. (67) Though various citations are referred to this Court, we find that the same are either irrelevant or repetitive and hence, we are dealing with few of them as under: (68) The reliance placed in the judgement of the Apex Court in the case of Mother Superior (supra) by the petitioner is misconceived since the Apex Court was dealing with the prov....