GST transition refund of VAT balance amount with interest upheld where no adjustment mechanism existed.

Amounts retained by the department after partial adjustment under the Value Added Tax regime were held refundable after the transition to the Goods and Services Tax regime, because no GST mechanism existed to further adjust the earlier collection. The revenue did not dispute entitlement to refund of the balance amount, and the earlier direction was modified to ensure refund of the amount still lying with the department after crediting the sum already set off. Interest was also directed to be paid on the refundable balance as previously ordered.

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Issues: Whether the amount remaining with the department after partial adjustment during the Value Added Tax regime was liable to be refunded with interest after the coming into force of the Goods and Services Tax regime.

Analysis: The entitlement to refund of the balance amount was not disputed by the revenue, and it was recognized that no mechanism existed under the Goods and Services Tax regime for adjustment of the amount collected during the earlier Value Added Tax regime. On that basis, the earlier order was required to be modified to secure refund of the amount still lying with the department, after giving credit for the amount already adjusted, together with interest as earlier directed.

Conclusion: The balance amount lying with the department was directed to be refunded with interest, after adjusting the amount already set off.

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