Tax Credit Dispute Resolved: Petitioner Wins Input Tax Credit Regularization After Challenging Incorrect Interest Charge

The HC allowed the writ petition challenging a tax credit notice. Following SC directions in a related case, the respondent regularized the petitioner's transitional input tax credit. The court directed the tax authority to withdraw the interest charge on the incorrectly transitted credit, effectively resolving the tax dispute without imposing costs.

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Issues involved:
The issues in this case involve the incorrect transitting of input tax credit, issuance of notice for payment, imposition of interest under TNGST Act, 2017, and subsequent regularization of credit based on Supreme Court directions.

Transitting Input Tax Credit:
The petitioner, a Central Excise Assessee, mistakenly stated the amount under the wrong column while filing Form TRANS-1, resulting in the issuance of a notice by the respondent. The impugned order required the petitioner to pay the amount wrongly transitted as input tax credit under the VAT return, along with interest under Section 50(3) of the TNGST Act, 2017.

Supreme Court Directions:
The Hon'ble Supreme Court, in the case of Union of India Vs. Filco Trade Centre Pvt Ltd, directed the respondents to allow transitional credit for difficulties faced by the assessee in transitting input tax credit un-utilised by the cut-off date. Consequently, the respondent regularized the credit wrongly transitted as un-utilised VAT in the petitioner's account, as per the Supreme Court's order.

Regularization of Credit:
Following the Supreme Court's directive, the respondent passed an order allowing CGST transitional credit in favor of the dealer after due verification of records and recommendations from the CENTER. However, the interest imposed on the petitioner under Section 18(3) of the TNGST Act, 2017, was not set aside in the initial order.

Court Decision:
After considering arguments from both parties, the Court recalled the impugned order and directed the respondent not to charge any interest on the petitioner, as the transitted VAT credit lying unutilized had been regularized in the subsequent order. The writ petition was allowed, with no costs, and connected writ miscellaneous petitions were closed as a result of the Court's decision.

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