Situation: If one proprietorship concern is transferring its all stock in trade to new proprietorship concern by way of transfer of business and sold its fixed assets as per sec. 7 of CGST Act (i.e. charging GST on consideartion received) Query 1. Old proprietorship concern wants to transfer only part accumulated ITC as per sec 18 of CGST Act and remaining utilised by way of charging GST on sale of fixed assets. Is it correct or not and if not what to do? Query 2. If accumulated ITC is not available at time of transfer of business then ITC-2 will not able to be filed then any information is required to be given to department or not ? and also CA certificate is required to be generated or not?

Reply—As per section 18(3) of CGST Act, read with Rule 41 of CGST Rules, where there is a change in the constitution of a registered person on account of sale, merger, demerger, amalgamation, lease or transfer of the business with the specific provisions for transfer of liabilities, the said registered person shall be allowed to transfer the input tax credit which remains unutilised in his electronic credit ledger to such sold, merged, demerged, amalgamated, leased or transferred business in such manner as may be prescribed.

Form GST ITC-02 is to be submitted by the transferor along with a certificate issued from practicing Chartered Accountant or Cost Accountant certifying that the sale, merger, demerger, amalgamation, lease, transfer of the business has been done along with the transfer of liabilities. 

Transfer of part ITC is not allowed.