Transitional input tax credit can be allowed under GST where pre-GST returns show unutilised credit and the claim is verified on merits.

Transitional input tax credit under GST should not be denied where pre-GST service tax returns show that the credit was validly availed and remained unutilised at the time of transition. The court treated the petitioner's service tax registrations, monthly returns, and the acknowledged TRAN-1 filing as relevant to the claim, and held that initial GST-era confusion over the filing channel could not justify a blanket refusal. The respondents were directed to verify the returns on merits and, if the unutilised credit was found to exist, to allow transition through an electronic credit entry or, alternatively, cash refund after hearing the petitioner.

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Issues: Whether the petitioner was entitled to transition of unutilised input tax credit under the GST regime and consequential credit entry or refund, notwithstanding the dispute regarding filing of TRAN-1 and departmental acknowledgment.

Analysis: The petitioner's service tax registrations and prior monthly returns were relevant to determine whether input tax credit had been validly availed and remained unutilised before the GST transition. The fact that TRAN-1 had been uploaded and acknowledged, together with the confusion in the initial GST implementation period regarding the proper departmental channel, weighed against a blanket refusal to consider the credit claim. The decisive enquiry was whether the credit existed in the service tax returns before the GST regime came into force; if so, it ought to be given transition benefit.

Conclusion: The issue was answered in favour of the petitioner. The respondents were directed to verify the service tax returns and, if the stated credit remained unutilised, to permit it either through a corresponding electronic credit entry or by cash refund after hearing the petitioner.

Final Conclusion: The writ petition was disposed of with a direction to examine the transitional credit claim on merits and extend the benefit if the unutilised credit was found to exist.

Ratio Decidendi: Transitional input tax credit should not be denied where the assessee can establish from the pre-GST returns that the credit was validly availed and remained unutilised at the time of transition.

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