Transitional input tax credit cannot be denied where departmental communications prevented timely TRAN-1 filing and entitlement remains open for review.

Transitional input tax credit under the GST regime could not be denied merely because departmental communications prevented timely filing of TRAN-1. The Court noted that the Pondicherry GST framework did not bar transition of credit reflected in VAT returns, and that the authorities retained power to later examine and reverse credit if it was wrongly transitioned or utilised. As the petitioners were prevented from completing the transition at the relevant stage, the proper course was fresh consideration of their entitlement. The respondents were therefore directed to issue notice, consider the reply, and grant consequential relief if entitlement was established.

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Issues: Whether the petitioners could be denied transition of input tax credit under TRAN-1 on account of the impugned communications, and whether the matter required reconsideration by the respondents.

Analysis: The communications directed the petitioners not to avail transitional credit without approval and threatened reversal if books and records were not produced. The Court noted that the Pondicherry GST framework did not prohibit transition of input tax credit available under the VAT returns, but the communications had the practical effect of preventing filing of TRAN-1 within time. It was also observed that, even if credit had been transitioned, the respondents retained power under the GST enactments to reverse credit wrongly transitioned or utilized. Since the petitioners could not transition the credit at the later stage, the appropriate course was to have the respondents decide whether the petitioners were in fact entitled to the credit that could not be transitioned because of the impugned communications.

Conclusion: The petitioners were entitled to have their claim for transitional credit reconsidered, and the respondents were directed to issue notice, consider the reply, and grant relief if entitlement was established.

Final Conclusion: The writ petitions were finally disposed of with a direction for fresh adjudication of the petitioners' entitlement to transitional credit and consequential release of credit if found due.

Ratio Decidendi: Transitional credit under the GST regime cannot be denied merely because the authority's communication prevented timely filing, and the authority may subsequently examine entitlement and reverse credit only if it was wrongly transitioned or utilized.

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