Inter-State ITC Transfer on Amalgamation Allowed – Portal Restriction Invalid | HC

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  • Last Updated on 15 April, 2026

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inter-State ITC transfer

Case Details: Emerson Process Management (India) Pvt Ltd. vs. Union of India [2026] 185 taxmann.com 141 (Gujarat)

Judiciary and Counsel Details

  • A.S. Supehia & Pranav Trivedi, JJ.
  • Uchit N Sheth for the Petitioner.
  • Shashvata U Shukla, Senior Standing Counsel for the Respondent.

Facts of the Case

The petitioner, a registered assessee engaged in the manufacture of safety valves and components, was registered under GST in multiple States and underwent a court-approved amalgamation under the orders of the National Company Law Tribunal (NCLT). Pursuant to the said amalgamation, the petitioner sought transfer of unutilised input tax credit by filing statutory Form GST ITC-02 as prescribed under the CGST Rules. However, while attempting online filing, the GST portal generated a restriction message stating that the transferee and transferor must be registered in the same State or Union Territory, and the department also endorsed a similar objection on the said form. The petitioner contended that such a restriction was not contemplated under the statute and that, in the absence of an enabling online mechanism, the statutory entitlement could not be defeated, thereby necessitating acceptance of manual filing of Form ITC-02. The matter was accordingly placed before the High Court.

High Court Held

The High Court held that transfer of input tax credit upon amalgamation is expressly governed by Section 18(3) of the CGST Act, read with Rule 41 of the CGST Rules, and neither provision imposes any restriction based on the inter-State nature of amalgamation. It was observed that the portal-based restriction and the departmental endorsement, which introduced a condition not found in the statute, were without legal authority and could not override statutory provisions. The Court further held that the absence of an online facility cannot defeat a substantive right of credit transfer arising upon approved amalgamation. Accordingly, it was concluded that the petitioner was entitled to a transfer of credit, and the authorities were directed to accept and process Form ITC-02 manually in accordance with the law.

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Author: Taxmann

Taxmann Publications has a dedicated in-house Research & Editorial Team. This team consists of a team of Chartered Accountants, Company Secretaries, and Lawyers. This team works under the guidance and supervision of editor-in-chief Mr Rakesh Bhargava.

The Research and Editorial Team is responsible for developing reliable and accurate content for the readers. The team follows the six-sigma approach to achieve the benchmark of zero error in its publications and research platforms. The team ensures that the following publication guidelines are thoroughly followed while developing the content:

  • The statutory material is obtained only from the authorized and reliable sources
  • All the latest developments in the judicial and legislative fields are covered
  • Prepare the analytical write-ups on current, controversial, and important issues to help the readers to understand the concept and its implications
  • Every content published by Taxmann is complete, accurate and lucid
  • All evidence-based statements are supported with proper reference to Section, Circular No., Notification No. or citations
  • The golden rules of grammar, style and consistency are thoroughly followed
  • Font and size that's easy to read and remain consistent across all imprint and digital publications are applied