The Gujarat High Court has ruled in favor of Emerson Process Management (India) Pvt. Ltd., allowing the transfer of Input Tax Credit (ITC) across states following a company amalgamation. The case arose when Emerson, after merging with another company and obtaining NCLT approval, inherited unutilized ITC, including credits from before the GST regime. However, attempts to transfer this ITC through Form GST ITC-02 were thwarted by the GST portal, which mandated that both the transferor and transferee be located in the same state.

Emerson approached the High Court after repeated efforts to resolve the issue with authorities failed. The petitioner contended that neither Section 18(3) of the CGST Act nor Rule 41 imposed such a restriction on inter-state ITC transfers post-amalgamation. The key issue was whether ITC could be transferred between entities in different states despite the portal's restrictions.

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The Court determined that the statutory provisions did not limit inter-state ITC transfers in amalgamation scenarios. It declared the GST portal's requirement for same-state entities as invalid and emphasized that administrative or technical constraints, such as portal errors, cannot undermine the substantive rights granted by the statute. The Court directed the authorities to accept manual filings of Form ITC-02 and facilitate the ITC transfer within six weeks, pending the development of suitable system mechanisms.