Transitional GST credit barred where works contract input tax credit is not admissible under the GST regime.

Transitional credit under Section 140(1) of the Tripura State GST Act is available only to the extent the underlying credit is admissible under the GST regime. The Court held that credit relating to works contract services used for construction of immovable property is barred by Section 17(5)(c) of the CGST Act, except where the service is used for further supply of works contract service, so it could not be migrated through TRAN-1 merely because it arose under the earlier VAT regime. It also accepted the concurrent finding that the transitional claim was not supported by the records before the authorities, and the demand, interest and penalty were sustained.

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Issues: Whether the petitioner was entitled to carry forward excess VAT/TDS as transitional input tax credit under Section 140(1) of the Tripura State Goods and Services Tax Act, 2017 despite the restriction on input tax credit for works contract services under Section 17(5)(c) of the Central Goods and Services Tax Act, 2017.

Analysis: The petitioner sought to migrate excess amount deducted during the VAT regime as transitional credit through TRAN-1. The Court noted that Section 140(1) permits carry forward only of credit that is otherwise admissible as input tax credit under the GST regime. It further held that Section 17(5)(c) expressly bars input tax credit on works contract services used for construction of immovable property, except where such service is used for further supply of works contract service. The petitioner's activity of laying pipelines for the service recipient fell within that barred category, and the credit claimed could not be treated as admissible merely because it had arisen under the earlier tax regime. The Court also accepted the concurrent findings that the transitional claim was unsupported by the records referred to by the authorities.

Conclusion: The petitioner was not entitled to transition the claimed amount as input tax credit, and the demand, interest, and penalty were sustained.

Ratio Decidendi: Transitional credit under Section 140(1) is available only to the extent the underlying credit is admissible under the GST regime, and a credit expressly barred by Section 17(5)(c) cannot be migrated as input tax credit.

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