Input tax credit under VAT cannot be reversed under refund provisions meant for excess tax collections.

Section 56 of the Andhra Pradesh Reorganisation Act, 2014 concerns refund of tax or duty collected in excess and the corresponding liability between successor States. It does not extend to unused input tax credit standing in VAT ledgers, because such credit is not excess tax collection. On that basis, an audit objection relying on Section 56 could not support reversal of the transferred credit or the resulting demand, and the demand was set aside.

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Issues: Whether the credit balance standing in the petitioners' ledgers under the erstwhile VAT regime, represented by unused input tax, could be transferred to the GST regime, or whether the petitioners were confined only to a refund claim under Section 56 of the Andhra Pradesh Reorganisation Act, 2014.

Analysis: Section 56 of the Andhra Pradesh Reorganisation Act, 2014 governs refund of tax or duty collected in excess and apportions such refund liability between the successor States. The provision addresses excess collections and the consequent refund obligation of the successor State. The credit in question was input tax credit standing in the petitioners' ledgers and was not a case of tax collected in excess. As the statutory scheme of Section 56 does not extend to transfer of such input tax credit, the audit objection based on that provision could not justify reversal of the transferred credit or the consequential demand.

Conclusion: Section 56 of the Andhra Pradesh Reorganisation Act, 2014 was held inapplicable to the petitioners' input tax credit, and the demands raised by reversing the credit transfer were set aside in favour of the petitioners.

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