Transitional credit claims must stay within Section 140 limits; extraneous VAT mismatch issues cannot govern the decision.

Transitional credit under the Maharashtra GST regime must be examined strictly within the scope of Section 140, and the appellate authority cannot rely on a mismatch issue said to fall under the Maharashtra VAT regime. The authority's consideration was found to have strayed beyond the proper statutory field, making the appellate order unclear and procedurally unsustainable. The order was therefore set aside and the matter remanded for fresh adjudication of the transitional credit claim, confined to the statutory parameters and after hearing both sides. The substantive entitlement to transitional credit was left open for reconsideration.

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Issues: (i) Whether the appellate authority, while dealing with transitional credit under the Maharashtra Goods and Services Tax Act, 2017, could travel beyond the scope of Section 140 and rely on a mismatch issue said to fall within the Maharashtra Value Added Tax regime; (ii) whether the impugned appellate order was liable to be quashed and the matter remanded for fresh consideration of the transitional credit claim.

Issue (i): Whether the appellate authority, while dealing with transitional credit under the Maharashtra Goods and Services Tax Act, 2017, could travel beyond the scope of Section 140 and rely on a mismatch issue said to fall within the Maharashtra Value Added Tax regime.

Analysis: The scope of adjudication under Section 140 of the Maharashtra Goods and Services Tax Act, 2017 was confined to entitlement to transitional credit. The appellate authority was required to stay within that statutory field and could not base its decision on matters lying in the domain of assessment or inquiry under the Maharashtra Value Added Tax Act, 2005. The finding on system-generated mismatch was found to be unclear and beyond the proper jurisdictional ambit of the transitional credit proceedings.

Conclusion: The appellate authority could not lawfully rely on the extraneous mismatch issue while deciding the transitional credit claim.

Issue (ii): Whether the impugned appellate order was liable to be quashed and the matter remanded for fresh consideration of the transitional credit claim.

Analysis: Since the appellate order suffered from lack of clarity and had proceeded on an impermissibly wide footing, independent reconsideration of the claim was necessary. The proper course was to set aside the order and restore the appeal for a fresh decision confined to the statutory scope of transitional credit under Section 140, after giving both sides an opportunity of hearing.

Conclusion: The impugned order was quashed and the matter was remanded to the appellate authority for fresh adjudication.

Final Conclusion: The writ petition succeeded only to the extent of setting aside the appellate order and securing a fresh decision on the transitional credit issue, while leaving the substantive entitlement open for reconsideration.

Ratio Decidendi: In proceedings concerning transitional credit, the adjudicating authority must confine itself to the statutory parameters governing that credit and cannot decide the matter on issues falling outside that jurisdiction.

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