Taxpayer Wins Right to Claim Transitional Input Tax Credit Under Section 140, Ensuring Fair GST Credit Adjustment

The SC directed respondents to allow the petitioner to utilize transitioned input tax credit under Section 140 of CGST Act, 2017. After reviewing the revised TRAN-1 return and verification report, the court ordered prompt reflection of eligible credit in the petitioner's electronic ledger, enabling tax liability discharge. The writ petition was disposed of without costs, with specific instructions to the tax authorities.

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Issues involved:
The issues involved in this case are related to the utilization of input tax credit transitioned under Section 140 of the CGST Act, 2017, and the reflection of the amount in the electronic credit ledger of the petitioner.

Summary:

Utilization of Input Tax Credit:
The petitioner filed a writ petition seeking a mandamus to direct the respondents to allow them to utilize the input tax credit transitioned under Section 140 of the CGST Act, 2017. The petitioner claimed that although the respondents had allowed the credit, it was not reflected in their electronic credit ledger, hindering their ability to utilize it for tax liabilities. The Court directed the respondents to ensure that the amount is reflected in the electronic credit ledger promptly to enable the petitioner to discharge its tax liabilities under the GST enactments.

Revised Return Filing:
Following the direction of the Hon'ble Supreme Court, the petitioner filed a revised return in Form TRAN-1, claiming specific amounts for Central Tax and VAT. The Court, after reviewing the reasons stated in the affidavit, directed the respondents to take necessary steps to reflect the claimed amount in the electronic credit ledger for the petitioner's use in tax payments.

Impugned Order and Verification Report:
The respondent passed an order rejecting a portion of the transitioned credit claimed by the petitioner without granting a personal hearing. The impugned order specified the reasons for non-eligibility of certain amounts claimed as input tax credit. Based on a verification report from the Superintendent of CGST, the Court considered certain amounts as inadmissible ITC under specific tables of the revised TRAN-1 returns. The Court disposed of the writ petition with the mentioned observations, emphasizing the need for prompt action to reflect the credit in the petitioner's electronic ledger for tax discharge purposes.

Pending Cases and Disposal:
The petitioner had filed additional cases before the Hon'ble High Court of Madras for credit on closing stock in respect of goods purchased/imported before June 2016, which are still pending. The writ petition in question was disposed of without costs, with the Court providing specific directions to the respondents regarding the reflection of the transitioned credit in the petitioner's electronic credit ledger.

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