Page 71 - GSTL_2nd April 2020_Vol 35_Part 1

2020 ] DEPARTMENTAL CLARIFICATIONS C7
d. (i) In order to According to sub-section (3) of section 18 of the CGST
calculate the Act, “Where there is a change in the constitution of a
amount of trans- registered person on account of sale, merger, demerger,
ferable ITC, the amalgamation, lease or transfer of the business with the
apportionment specific provisions for transfer of liabilities, the said registered
formula under person shall be allowed to transfer the input tax credit
proviso to rule which remains unutilized in his electronic credit ledger
41(1) of the to such sold, merged, demerged, amalgamated, leased or
CGST Rules has transferred business in such manner as may be prescribed.”
to be applied to Further, sub-rule (1) of rule 41 of the CGST Rules
the unutilized prescribes that the registered person shall file the details
ITC balance of in FORM GST ITC-02 for transfer of unutilized input
the transferor. tax credit lying in his electronic credit ledger to the
However, it is transferee.
not clear as to A conjoint reading of sub-section (3) of section 18 of the
which date shall CGST Act along with sub-rule (1) of rule 41 of the CGST
be relevant to Rules would imply that the apportionment formula shall
calculate the be applied on the ITC balance of the transferor as
amount of available in electronic credit ledger on the date of filing
unutilized ITC of FORM GST ITC-02 by the transferor.
balance of
transferor.
(ii) Which date According to section 232(6) of the Companies Act, 2013,
shall be relevant “The scheme under this section shall clearly indicate an
to calculate the appointed date from which it shall be effective and the
ratio of value of scheme shall be deemed to be effective from such date and not
assets, as at a date subsequent to the appointed date”. The said legal
prescribed in the provision appears to indicate that the “appointed date
proviso to rule of demerger” is the date from which the scheme for
41(1) of the demerger comes into force and it is specified in the
CGST Rules, respective scheme of demerger. Therefore, for the
2017? purpose of apportionment of ITC under rule sub-rule (1)
of rule 41 of the CGST Rules, the ratio of the value of
assets should be taken as on the “appointed date of
demerger”.
In other words, for the purpose of apportionment of ITC
under sub-rule (1) of rule 41 of the CGST Rules, while
the ratio of the value of assets should be taken as on the
“appointed date of demerger”, the said ratio is to be
applied on the ITC balance of the transferor on the date
of filing FORM GST ITC-02 to calculate the amount to
transferable ITC.

4. Difficulty, if any, in implementation of the Circular may be brought
to the notice of the Board. Hindi version would follow.
[C.B.I. & C. Circular No. 133/03/2020-GST, dated 23-3-2020]

GST LAW TIMES  2nd April 2020  135