Transitional input tax credit under GST: vested-right, time-limit and legitimate-expectation issues remain under further hearing.

Transitional input tax credit under Section 140 of the CGST Act and Rule 117 of the CGST Rules is examined on whether such credit is a vested right, whether a time limit for transition or utilisation is constitutionally impermissible, whether Rule 117 is mandatory or directory, whether the statutory scheme merely regulates enforcement of the credit, whether a legitimate expectation exists to carry forward credit without temporal restriction, and whether denial of the credit amounts to double taxation. The writ petitions were not finally decided and were posted for further hearing, with notice issued to the remaining respondents.

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Issues: Whether input tax credit is a vested right and whether a time limit for transitioning or utilising it is constitutionally impermissible; whether the time limit in Rule 117 of the Central Goods and Services Tax Rules, 2017 is mandatory or directory; whether Section 140 of the Central Goods and Services Tax Act, 2017 read with Rule 117 divests an alleged vested right or prescribes conditions for its enforcement; whether there is a legitimate expectation to carry forward transitional input tax credit without a time limit; and whether denial of transitional input tax credit amounts to double taxation.

Outcome: The writ petitions were not finally decided and were posted for further hearing, with notice issued to the remaining respondents.

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