M/s Alstom Transport India Limited Vs Additional Commissioner, CGST And Central Excise (Appeals) & Ors. [SCA No. 11025 Of 2025 Dated January 23, 2026.

The Hon'ble High Court dismissed petitions and upheld the denial of GST refund due to statutory noncomplianceinregistration,cancellation,andITC transferprocedures

BRIEF FACTS OF THE CASE

• ThePetitioner, Alstom Transport India Limited (‘ATIL'), came into existence pursuant to an order dated August 10, 2023, passed by the National Company Law Tribunal (‘NCLT'), whereby Alstom Rail Transportation India Pvt. Ltd. (‘ARTIPL'), along with two other group entities, were amalgamatedinto ATIL.
• The certified copy of the NCLT order was filed with the Registrar of Companies on September 22, 2023, which was the effective date of amalgamation, and the said development wasdulyintimatedto the jurisdictional GST authorities on October 10, 2023.
• Inanticipation of the amalgamation, ATIL had filed FORM GST REG-01 on May 10, 2023, for obtaining GST registration. Subsequently, a show-cause notice dated November 07, 2024, wasissued proposingthe cancellation of ARTIPL's GST registration, and the registration was thereafter cancelled with effect from November 29, 2024.
• Pursuant to the amalgamation, ARTIPL filed Form GST ITC-02 on October 20, 2023, and transferred unutilised ITC amounting to Rs 192,87,53,211/- to ATIL, while the balance credit of Rs 49,14,00,000/- remained in the electronic credit ledger of ARTIPL. The erstwhile ARTIPL had exported goods in April 2023 and thereafter filed month-wise refund applications seeking refund of the said unutilised input tax credit amounting to Rs 49,14,00,000/-. The refund claims were adjudicated, and a refund amounting to Rs 2,56,75,437/- was sanctioned.
• Subsequently,therefundsanction orderwasreviewedunderSection107(2)oftheCGSTAct, and the department was directed to file an appeal. The appellate authority allowed the departmental appeal and set aside the refund sanction order vide Order-in-Appeal dated January 01, 2025 on the basis that once amalgamation takes effect, unutilised ITC can only be dealt with in the manner prescribed under Section 18(3) read with Rule 41, and the statute does not permit bifurcation of credit between transfer and refund. Aggrieved by the said Appellate order, the petitioner preferred a writ petition before the Hon'ble Gujarat High Court challenging the appeal order rejecting the refund claimed by the Petitioner.

KEY OBSERVATIONS OF THE HON'BLE HIGH COURT

• The Hon'ble High Court examined the relevant provisions governing registration and cancellation under the CGST Act, 2017, in the context of amalgamation. It was held that section 22(4) states that the transferee shall be liable to obtain GST registration where a business is transferred pursuant to a scheme of amalgamation sanctioned by a Tribunal, the transferee entity is liable to obtain GST registration from the date on which the Registrar of Companies issues the certificate of incorporation giving effect to such order. Consequently, ATIL's liability to register arose only on September 22, 2023, and any application for registration prior to that date was dehors the statute. The anticipatory filing of Form GST REG-01 and the grant of retrospective registration were therefore contrary to law, as the Act does not contemplate registration in anticipation of afuture amalgamation.
• The Court clarified that mere intimation of amalgamation to the Department does not amount to compliance, and the availability of suo motu cancellation powers under Section 29 of the CGST Act read with Rule 22 of CGST rules does not dilute the registered person's obligation to seek cancellation in the prescribed manner. Furthermore, the Court also held that Section 87(2) of the CGST Act, mandates cancellation of the transferor's registration with effect from the date of the Tribunal's order, the Court held that ARTIPL's registration ought to have been cancelled from August 10, 2023, the date of the NCLT order, and not prospectively from November 29, 2024. On an overall assessment, the Court found that anticipatory registration of the transferee, failure to seek timely cancellation by the transferor, delayed departmental action, and grant of retrospective registration collectively resulted in an impermissible situation where both entities were treated as co-existing registered persons post-amalgamation. The Court emphasised that such an outcome defeats the statutory scheme and cannot besustainedinlaw.
• Furtherinlightofprovisions of Section 54(3) and ruling of the Hon'ble Supreme Court in the case of Union of India v. VKC Footsteps (India) Pvt. Ltd., (2022) 2 SCC 603, the Court observed that refund is a statutory concession and not a constitutional right. It further held that in case of merger / amalgamation, , the unutilised ITC can only be dealt with in the manner prescribed under Section 18(3) read with Rule 41 which mandates transfer of the entire unutilized credit balance to the transferee entity and that the petitioner, cannot selectively retain partial ITC for claiming refund after transferring the remaining credit to the transferee.
• Inaddition to the above, the Hon'ble Court, while acknowledging the fact that there is no statutory time limit under law to transfer ITC to the transferee entity by filing Form ITC-02, ruled that all the formalities of transfer of unutilized credit should be completed within the timeline specified in the amalgamation / merger order in order to avoid any further complications.
• ThePetitionerhasfurther arguedthat in order tosafeguard the vested right of refund which is accrued to ARTIPL, the Petitioner should be allowed to claim the refund since the right to claim refund now vests with the Petitioner by virtue of amalgamation. However, the Court ruled that the Petitioner cannot be allowed to claim the refund of unutilized credit since the statute does not permit the course suggested by thePetitioner.

AURTUS COMMENTS

• In the present case, the Hon'ble Gujarat High Court has adopted a stringent and highly formalistic interpretation of the GST framework governing mergers and the transfer of unutilised credit. By reading the provisions of Section 29(1) and Section 87(2) of the CGST Act, along with Rule 20 of the CGST Rules, the Court has adopted a literal interpretation, without appreciating the business and commercial realities faced by businesses at the time of amalgamation. It is relevant to acknowledge that an amalgamation/merger has multiple timelines under various statutes. While the accounting and company law provisions allow a retrospective effective date, the GST law does not intend to alter any past status/reporting. Hence, the GST law provides prospective recognition of the new successor entity, with attendant transfer provisions, whether for ITC or liabilities. Such prospective identity would require that any turnover of the transferor entity continue to be that of the transferor, and that any benefits arising from such turnover be available to the transferor. The transfer of ITC under Section 18(3) is a beneficial provision that enables the transferee to take over and carry forward any unutilized ITC. However, the provision under Section 18 should not curtail the entitlement of a taxpayer under section 54, especially where such ITC can be directly attributed to the export turnover achieved and reported by the transferor.
• Furthermore, the implied timelines imposed by the Court with respect to the transfer of ITC to the successor entity would create challenges in cases where the vendor continues to raise tax invoices on the GSTIN of the transferor entity. The ruling may also prompt revenue authorities to dispute ITC transfers in which Form ITC-02 was filed by the transferor entity after an extended period.
• Akeyissuethatalsorequirescareful consideration is theapplication of this decision to other forms of business restructuring, such as a demerger or a partial slump sale and whether the transfer of ITC is mandatory pursuant to such restructuring. Rule 41(1) of the CGST Rules provides a carve-out in the case of a demerger, permitting partial transfer of ITC in proportion to the asset ratio. The prescribed formula requires consideration of all assets, irrespective of whether they are relevant to the business being demerged or qualify as GST assets. For example, assets such as cash, receivables, buildings, and land must also be included. Furthermore, there is ambiguity on whether the asset ratio should be applied at the State level or on a pan-India basis. This approach may distort the transfer of credits, resulting in larger credits being allocated to the demerged entity, which may subsequently be blocked. One could still argue that, in the context of a demerger, the transfer of credit is not mandatory, and the apportionment formula applies only where credit is intended to be transferred. Both entities/registrations (pre-demerger and post-demerger) continue to exist independently. However,this interpretation is likely to be contentious with the authorities.
• The ruling, therefore, presents several practical challenges for taxpayers, particularly in terms of constraints on commercial decisions to retain ITC in the case ofa demerger / partial slump sale. Consequently, businesses contemplating mergers and amalgamations must reassess their restructuring timelines, ensure meticulous procedural compliance, and prepare for heightened departmental scrutiny of ITC transfers.

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