Voltas GST Notice ₹265.25 Cr: Input Tax Credit Under Scanner
Voltas Limited has received a GST show cause notice of ₹265.25 crore from the Directorate General of GST Intelligence (DGGI). The notice stems from alleged wrongful availment of Input Tax Credit (ITC) linked to its merged entity, Universal MEP Projects & Engineering Services Ltd.
This case is more than just headline news — it’s a real-time example of how tax compliance post-merger can turn into a liability if due diligence slips. Let’s break it down.
Why Was the GST Notice Issued to Voltas?
- Availing ineligible input tax credit worth ₹265.25 crore
- Doing so under GSTIN belonging to its merged subsidiary
- Violating Section 16 and 17 of the CGST Act, 2017
The DGGI Mumbai Zonal Unit issued the SCN (Show Cause Notice) under Section 74 of CGST Act, which deals with fraud, willful misstatement, or suppression of facts.
Legal Reference:
- 📜 Section 16: Conditions to avail ITC
- 📜 Section 17: Apportionment of ITC and blocked credits
- 📜 Section 74: Tax evasion involving fraud
GST Compliance Post-Merger: What Went Wrong?
When one entity merges into another, tax and legal identities shift. Any failure to update GST registrations, transfer ITC properly, or follow transitional provisions can trigger major disputes.
Key Tax Risks in Mergers and Acquisitions (M&A)
Here’s what Voltas’ case highlights for Indian businesses:
✅ Ensure GST registration amendments post-merger
✅ File ITC-02 form to legally transfer input credit to the new entity
✅ Avoid using old GSTIN for invoices or credit claims
✅ Maintain audit trail of transitional entries
Practical Expert Tip
Chartered Accountant Insight:
“Post-merger GST compliance isn’t just about filing returns. ITC eligibility changes with legal identity. Businesses must file Form ITC-02 and get clear documentation of asset and credit transfer. Else, it can invite interest and penalty under Section 50 and 122.”
What Should Other Taxpayers Learn?
If you’re a small or mid-sized company going through merger, demerger, or rebranding, make sure you:
- Reconcile old GSTINs and close them officially
- Use Form ITC-02 within the timeline
- Communicate with vendors on updated GSTIN
- Ensure PAN and legal name match across GST, MCA, and Income Tax
Summary
Voltas received a ₹265.25 crore GST notice over ITC misuse post-merger. The case stresses proper filing of ITC-02 and closing old GSTINs. Merged entities must follow CGST Act norms to avoid tax liability.
FAQs
Q1. What is Form ITC-02 under GST?
It is used to transfer input tax credit from one GSTIN to another during mergers, demergers, or sale of business.
Q2. What is the penalty under Section 74 of CGST Act?
100% penalty along with interest if fraud or suppression is proven.
Q3. Can ITC be claimed using old GSTIN post-merger?
No. ITC must be transferred to the new GSTIN using ITC-02.
Final Thoughts
Voltas’ notice is a cautionary tale. ITC claims after merger demand careful compliance. Businesses must not delay legal updates and tax reconciliations. The cost of oversight? ₹265.25 crore and counting.
Don’t wait for a notice. Let Efiletax help you stay compliant post-merger, with end-to-end GST and ITC support.