Chapter V

Certificate under Section 18(3) of the CGST Act

Suggested Format of Certificate

Independent Practitioner’s Certificate under the Central Goods and Services Tax Act, 2017 (in short “CGST Act”) and State Goods and Services Tax Act, 2017 / Union Territory Goods and Services Tax Act (in short “SGST/UTGST Act”) in terms of Section 18(3) of the said Acts and Rule 41(2) of the Rules issued under such Acts.

Name and Address of the Applicant

1. This Certificate is issued in accordance with the terms of our agreement dated ………………..

2. M/s. ………………………… (hereinafter referred to as the “Applicant’ or ‘Transferor’) is a registered person vide GSTIN …………… and is having its principal place of business at …………………………………… ………………………………… in the State of ……………………….... The Applicant has the following additional places of business:

(a) __________________________________________
(b) __________________________________________

3. In terms of Section 18(3) of the CGST and SGST/UTGST Acts read with Rule 41 of the CGST and SGST/UTGST Rules, 2017, 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 un-utilized in his electronic credit ledger to such sold, merged, demerged, amalgamated, leased or transferred business in the manner prescribed in the CGST and SGST/UTGST Rules, 2017 by declaring the same, electronically, on the common portal in Form GST ITC-02. (hereinafter referred to as the “Statement”)

Rule 41(2) of the CGST and SGST/UTGST Rules, 2017 provides that the transferor shall also submit a copy of a certificate issued by a practicing Chartered Accountant or Cost Accountant certifying that the sale, merger, de-merger, amalgamation, lease or transfer of business has been done with a specific provision for the transfer of liabilities.

4. The Applicant has sold / merged / de-merged / amalgamated / leased / transferred [strike whichever not applicable] its business to M/s …………………………… GSTIN: ………………….. (hereinafter referred o as “Transferee”) vide amalgamation / merger / demerger Order No……. dated …….. passed by ……………. with a specific provision for the transfer of all liabilities

OR

Business Transfer Agreement dated ……… with a specific provision for the transfer of all liabilities vide clause …… of the said document.

OR

Change in ownership of business taken place due to death of the transferor on dated ……………….. and the business of the transferor stands transferred to ………………………. Legal heir of the transferor having GSTIN …………………….. (hereinafter referred as “Transferee“ on dated…. )

Management’s Responsibility for the Statement

5. The preparation of the Statement is the responsibility of the Management of................................... [Name of the Applicant] including the preparation and maintenance of all accounting and other relevant supporting records and documents. This responsibility includes the design, implementation and maintenance of internal control relevant to the preparation and presentation of the Statement and declaration and applying an appropriate basis of preparation; and making estimates that are reasonable in the circumstances.

The management is also responsible for ensuring that the Applicant complies with the requirements of CGST and SGST/UTGST Acts and CGST and SGST/UTGST Rules.

6. Management of the Applicant is responsible to ensure that books, records documents and information made available for purposes of verification are truthful and reliable, extracted from contemporaneous records for the purposes of establishing reliability of assertions made by them.

Practitioner’s Responsibility

7. Pursuant to the requirements of Section 18(3) of the CGST and SGST/UTGST Acts read with Rule 41(2) of the CGST and SGST/UTGST Rules, 2017, it is our responsibility to examine the books of accounts and other relevant documents / records of the Applicant and to provide a reasonable assurance that the sale, merger, demerger, amalgamation, lease or transfer or business has been done with a specific provision for the transfer of liabilities.

8. We conducted our examination of the Statement in accordance with the Guidance Note on Reports or Certificates for Special Purposes (Revised 2016) issued by the Institute of Chartered Accountants of India. The Guidance Note requires that we comply with the ethical requirements of the Code of Ethics issued by the Institute of Chartered Accountants of India.

We have complied with the relevant applicable requirements of the Standard on Quality Control (SQC) 1, Quality Control for Firms that Perform Audits and Reviews of Historical Financial Information, and Other Assurance and Related Services Engagements.

Opinion

9. We have examined the books of accounts and other relevant documents / records of the Applicant for the purpose of Section 18(3) of the CGST Act and SGST/UTGST Acts and Rule 41(2) of CGST and SGST/UTGST Rules, 2017.

10. Based on our examination as above and the information and explanation given to us, in our opinion, the sale, merger, demerger, amalgamation, lease or transfer or business has been done with the specific provision for the transfer of liabilities.

Restriction on Use

11. This certificate is addressed and provided to the ……..[Name of the Applicant] solely for the purpose of submission to (Name of the Authority) pursuant to the requirements of Section 18(3) of the CGST and SGST/UTGST Acts read with Rule 41(2) of the CGST and SGST/UTGST Rules, 2017 and should not be used by any other person or for any other purpose. Accordingly, we do not accept or assume any liability or duty of care for any other purpose or to any other person to whom this certificate is shown or into whose hands it may come without our prior consent in writing.

12. The certificate as per Rule 41(2) is only required to be issued to certify that the sale, merger, demerger, amalgamation, lease or transfer or business has been done with a specific provision for the transfer of liabilities. The certificate has not been issued to certify admissibility of the input tax credit with reference to any other condition as per the provisions of Section 18(3) read with Rule 41 or any other provision under the Statute.

Place of Signature: _______
Date: _________________

Check points for the Chartered Accountants -

(i) Verify registration particulars with the Registration Certificate.

(ii) Do not take responsibility for filing the respective statutory form prescribed as the same is the responsibility of Management. Practitioner’s responsibility is to certify that the sale, merger, demerger, amalgamation, lease or transfer or business has been done with a specific provision for the transfer of liabilities.

(iii) Ensure that the transferee has a valid GSTIN. The Amalgamation / Merger / Demerger Order or relevant Business Transfer Agreements should be thoroughly perused to ensure that there is a specific provision for transfer of liabilities.

(iv) Ensure that the inputs or capital goods whose credit is proposed to be transferred are also accounted in books of the Applicant as transferred.

(v) This certificate is to be issued in respect of a person who has sold / merged / de-merged / amalgamated / leased / transferred its business with a specific provision for the transfer of liabilities.

(vi) Ensure that the certificate issued is in accordance with the Guidance note on Reports and Certificates for special purpose issued by the ICAI.

(vii) Ensure that a letter of representation is taken from the Management of the Applicant for the details and information provided by them.