Change in the constitution

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Section 18 (6) Where there is a change in the constitution of a registered taxable person on account of

  1. Sale,
  2. Merger,
  3. Demerger,
  4. Amalgamation,
  5. Lease or
  6. Transfer of the business

With the specific provision for transfer of liabilities, the said registered taxable person shall be allowed to transfer the input tax credit that remains unutilized in its books of accounts to such sold, merged, demerged, amalgamated, leased or transferred business in the manner prescribed.

Thus, in terms of sec 18(6) of the revised MGL, the transferor shall be allowed to transfer the input tax credit that remains unutilized in its books of accounts.

The only condition with this transfer is that there must be specific provision in the agreement of transfer of business as to transfer of all liabilities of the business. This provision is made to save from bogus transfer of business with a view of availing unutilized input tax.

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