Transitional credit under GST allows migration of excess VAT-era TDS credit reflected in pre-GST returns.

Excess tax deducted at source reflected as carried-forward credit in a pre-GST VAT return was treated as transitional credit eligible for migration into the GST electronic credit ledger under section 140(1) of the JGST Act. The proviso to section 140(1) was read as restricting transition only where the underlying credit related to supplies barred from input tax credit under GST, and Rule 117 could not narrow the parent provision. The unadjusted amount was also viewed as refundable under the pre-GST regime, so its migration could not be denied merely because it was described as TDS in the return. The revisional order and demand rejecting migration were held unsustainable.

---

---

Issues: Whether excess tax deducted at source under section 45 of the Jharkhand Value Added Tax Act, 2005, which stood reflected as carried-forward credit in the pre-GST return, could be migrated into the electronic credit ledger under section 140(1) of the Jharkhand Goods and Services Tax Act, 2017, and whether the revisional order and consequential demand rejecting such migration were sustainable.

Analysis: The credited amount arising from tax deduction at source under the VAT regime was treated in the statutory return as an excess amount to be carried forward, and the Court held that such amount formed part of the credit capable of transition under section 140(1) of the JGST Act. The proviso to section 140(1) was read as limiting migration only where the underlying credit related to transactions expressly barred from input tax credit under the GST regime. Rule 117 of the JGST Rules, being subordinate legislation, could not be applied to curtail the scope of the parent transitional provision. The Court also noted that the unadjusted amount would otherwise have been refundable under the pre-GST regime and could not be denied migration merely because it was denominated as TDS in the return.

Conclusion: The petitioner was entitled to migrate the excess TDS credit into the GST electronic credit ledger, and the revisional order and demand notice rejecting that claim were unsustainable.

---