Case Of: M/s. Emerson Process Management (India) Pvt Ltd
Issued By: Gujarat High Court
Order No: R/SCA 7004 of 2024
Date: 5th Mar 2026
Pursuant to an NCLT-approved amalgamation (14.11.2019), the transferor entity merged into the applicant, with all assets, liabilities, and accumulated ITC—including transitional CGST credit via TRAN-1—intended to vest in the applicant.
The applicant attempted transfer of ITC through Form GST ITC-02; however, the GST portal rejected the filing citing a “same State/UT” restriction between transferor and transferee registrations.
The applicant challenged the denial before the High Court, contending that neither Section 18(3) of the CGST Act nor Rule 41 of the CGST Rules prescribes any
such geographical limitation.
Reliance was placed on Umicore Autocat India Pvt. Ltd., while the revenue argued GST is State-specific, cited administrative circulars, and highlighted pendency of challenge before the Supreme Court.
The High Court held that Section 18(3) read with Rule 41 permits transfer of ITC upon amalgamation without imposing any “same State” condition; the portal restriction lacks statutory backing.
It was observed that procedural tools (such as Form ITC-02) cannot introduce substantive conditions absent in the parent legislation, nor can system limitations override vested statutory rights.
The Court endorsed the reasoning in Umicore Autocat India Pvt. Ltd., reiterating that seamless flow of ITC is a foundational objective of GST, and inter-State
distinctions do not justify denial of eligible credit.
The department was directed to allow manual filing and processing of Form ITC-02 to give effect to the ITC transfer until appropriate system functionality is
implemented.