ITC Transfer Allowed After Merger Even If GSTINs Are in Different States | AAR

Case Details: Flytxt Mobile Solutions (P.) Ltd., In re - [2025] 179 taxmann.com 545 (AAR-KERALA)

Judiciary and Counsel Details

• Jomy Jacob & Mansur M.I., Member
• Anil Kumar Ramachandran for the Appellant.

Facts of the Case

The applicant, engaged in the business of IT software services. It submitted that it had merged with another company, whereby the entire business, assets, and liabilities of the transferee company, M, located in Haryana, were transferred to the applicant in Kerala. The transferee company had an unutilized Input Tax Credit (ITC) balance in its electronic credit ledger. It was contended that the closing balance of CGST and IGST in the electronic ledger of the transferee should be allowed to be transferred to the applicant despite the two GSTINs being in different States. The applicant asserted that no SGST was involved and the portal’s denial of ITC transfer was unlawful; the matter was placed before the Authority for Advance Ruling (AAR).

AAR Held

The AAR held that the ITC proposed to be transferred included only CGST and IGST, and there was no statutory prohibition against the transfer of such ITC due to a merger of taxpayers across States. It was noted that Section 18 of the CGST Act provides for the transfer of unutilized ITC in cases of a change in the constitution of a registered person, including mergers approved by the National Company Law Tribunal. The AAR held that the applicant was entitled to transfer the closing balance of CGST and IGST appearing in the electronic credit ledger of the transferee company to its own GSTIN in Kerala. Accordingly, the AAR allowed the transfer of ITC to the resulting company, setting aside the portal’s disallowance.