Petitioner entitled to transitional input tax credit for unutilized advance VAT payments under Section 140 TNGST Act 2017

The Madras HC allowed a writ petition challenging denial of transitional input tax credit for unutilized advance VAT payments. The court held that Section 140 of the TNGST Act 2017 clearly permits transition of any unutilized VAT or entry tax amounts to electronic credit ledger under GST regime. The petitioner was entitled to credit for advance VAT payments that remained unutilized under the previous VAT system. The HC quashed the respondent's order denying the transitional credit, ruling there was no scope for such denial under the statutory provisions.

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Issues:
The issues involved in the judgment are the denial of transitional tax remaining unutilized in VAT returns and the interpretation of Section 140 of the TNGST Act, 2017.

Denial of Transitional Tax:
The petitioner challenged the order denying the transitional tax remaining unutilized in VAT returns filed for July 2017. The petitioner, engaged in the sale of ceramic tiles, imported tiles from various states and paid advance tax at Tuticorin port. The petitioner sought to transition the unutilized advance tax under Section 140 of the TNGST Act, 2017. The petitioner argued that the impugned order should be quashed as there was no scope for denying the transition of unutilized advance tax.

Interpretation of Section 140 of TNGST Act, 2017:
The Additional Government Pleader contended that only input tax credit unutilized as of June 30, 2017, could be transitioned under Section 140. He argued that the petitioner could seek a refund for the unutilized advance tax but could not transition it. The Government Pleader emphasized that advance tax was not equivalent to input tax credit. He suggested that the petitioner could pursue remedies before the Appellate Authority under Section 107 of the TNGST Act, 2017.

Judicial Interpretation and Decision:
The Court considered arguments from both sides and reviewed the VAT returns filed by the petitioner, confirming the unutilized balance. Referring to Section 140 of the TNGST Act, 2017, the Court highlighted that any unutilized VAT or entry tax amount must be allowed to be transitioned. Citing precedents, the Court emphasized that validly availed input tax credit could not be denied and should be carried forward for adjustment under the GST regime.

Final Decision:
The Court allowed the writ petition, directing the respondents to enable the petitioner to rectify or manually file the necessary forms for transitioning the unutilized tax amount. The Court emphasized that officers under the GST Act must adhere to limitations and granted 90 days for the completion of the transition process. The impugned order was quashed, and the writ petition was allowed without costs.

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