Transitional Credit u/s 140 of GST Act

[THYAGARAJAN KALYANASUNDARAM]

Dear Experts,

One of my client's executing works contract in Tamil Nadu and had been paying taxes u/s 5 of TNVAT Act,2006. Further, he has huge credit of WCT TDS under the erstwhile act which could be adjusted only upon liability arises at the time of filing the return under the TNVAT Act,2006 after exhausting the Input Tax Credit.

As per the GST Act, we can carry forward the credit which is reflecting in the june,2017 and transfer through filing TRAN-1 return, whereas TDS credit apart from excess ITC the said WCT TDS was not reflected.

However, the client was availed the legitimate credit through TRAN-1 which has been objected by the State authority and issued a notice to the client. Since, the Tamil Nadu Sales Tax authority has created and design the Website which was convenient for them on the contrary my client is suffering and the working capital is blocked.

Now, im decided to file a writ petition before the high court of madras to defend this issue.

Could any experts give opinion on this and also share if any citation on this.

Thanks in Advance.

[MUKUND THAKKAR]

If Dept have any issue can sending the cross verification for correctness of certificate to concern vat dept. deducted counter part had submitted the all details to his vat dept. This is the only solution if dept is not able to view the details on their system.

[THYAGARAJAN KALYANASUNDARAM]

Dear sir,

All the TDS was made only through online. This can be adjusted only upon further liability after setting off the input tax credit otherwise the TDS will be accumulated.

[Alkesh Jani]

Sir,

Hope this may be help you in the matter

Hon’ble Apex court in case of CCE Pune Vs. Dai Ichi karkaria Ltd., = 1999 (8) TMI 920 - SUPREME COURT held that “the Cenvat credit cannot be simply allow to lapse, as it is equal to “as good as tax paid…” In case of M/s. Pluscon Systems Pvt. Ltd, OIA Number PUN-EXCUS-001-APP-603/18-19 dated 21.02.2019, The Commissioner (Appeals), also held that CENVAT credit cannot lapse on its own i.e. credit is indefeasible & the credit cannot wished away as far as the genuineness is questioned.

The above case is with regards to refund of credit. In my point of view, once credit is disputed, no refund can be sought. in either case, You can reverse the credit taken in TRAN-1 and can apply for refund. Further, credit was not utilized during the period for the payment of Tax.

Thanks,

With regards

[THYAGARAJAN KALYANASUNDARAM]

Dear Experts,

I have filed writ petition before the Honourable High Court of Madras based on the credit denied by the Authority through issue of notice. But, the Judge has given direction to the authority to pass an order. Hence, he has not consider our plea, since it is only a notice stage. So, we have to wait until the order passed by the concerned authority. Even though after passing an order whether the writ petition would be allowed or not, we have to wait and see. and also he may be directed us to go for an alternate remedy ie. appellate authority. If we go for an appellate authority, we have to again end up paying pre-deposit to defend the case.

Please advice me. Thanks in advance.

[Alkesh Jani]

Sir,

In this regards, you can take the stand as, whether the tax paid is and eligible credit and if the credit is eligible, it cannot be denied for any procedural lapses.

Thanks,

With Regards

[YAGAY andSUN]

Yes, it is a settled legal position that CENVAT credit cannot be lapsed due to any procedural issues.

[Praveen Manohar]

Sir,

We also have the same issue when the VAT has moved to a new website in June, 2016 and have changed their procedure to issue Online generated Form T but the deductors (local authority) did not have any idea about it. So the deductors have issued Form T in physical form. They have changed their procedure according to their convenience and without transferring proper knowledge to the deductors.

So we have claimed the pending VAT TDS (From June, 2016 to June, 2017) under SGST ITC in GST Tran 1 but our TNVAT authority have issued a notice not to claim the same and have informed us to repay with the acurred penalty.

Kindly guide our next course of action.

[Nikhil Chopra]

I have the exact same issue... Received a notice from the vat department. Kindly call me at 98182 44682 or 88510 01807 to discuss this.

AI Summary

Transitional GST credit carryforward contested after WCT TDS claimed via TRAN 1 was objected and notices issued. Transitional credit under Section 140 was claimed via TRAN 1 to carry forward WCT TDS and other pre GST credits; the State authority objected that WCT TDS was not reflected in its system and issued notices demanding repayment and penalties. The taxpayer filed a writ; the court directed the authority to pass a decision and did not grant relief at the notice stage, leaving open appellate remedies that may require pre deposit. Forum replies advise cross verification with deductors, reversal and refund routes, and emphasise that bona fide credits should not lapse due to procedural or IT migration issues.