Transitional Credit

[THYAGARAJAN KALYANASUNDARAM]

Dear Experts,

One of my client's instead of transfer the credit through by filing TRAN-1 from VAT to GST but taken wrongly in GSTR-3B. How do I rectify this mistake and get the proper credit?

If any case laws supporting this, please share this very urgently needed.

I appreciate any help you can provide.

[Ganeshan Kalyani]

In my view, there is no facility as of now to rectify such instance. If your claim of transitional credit is correct then you can still justify the authority that medium of carry forwarding the claim in incorrect but the claim it self is not. Was there any system error ?

[THYAGARAJAN KALYANASUNDARAM]

Dear Sir,

No sir. He was not attempted to file TRAN-1. Instead of filing Tran-1, he directly has taken this credit into GSTR-3B.

[Ganeshan Kalyani]

Sir, you will will have to justify your claim at the time of verification from the department.

[Ramkumar chelliah]

I would like to state that once a duty is paid the same can be allowed as Input Tax Credit. The Department cannot disallow the Input Tax Credit availed because the duty paid cannot be disputed and the use of the inputs in the supply of final product cannot be disputed. Hence the Input Tax Credit cannot be denied for the simple reason of not included in the GSTR-3B.

[Ganeshan Kalyani]

Sri Ramkumar Sir, I agree with you. However, the department may raise an objection stating that the transitional credit should have been claimed according to the transition provision. There were number of queries in 2017, 2018 and also in 2019 on the claim of transitional credit.

[KASTURI SETHI]

I support the views of Sh.Ganeshan Kalyani Ji. Such direct carry forward credit is not litigation-free. SCN is most likely to be issued by the department.

[THYAGARAJAN KALYANASUNDARAM]

Dear Sir,

My client was audited by the GST Central Officer and issued defects notes to the client. The officer insisting the client to reverse and pay the wrong credit availed through GSTR-3B along with Interest, else they will issue SCN. I told the client to take the SCN, based on the cause of action; we will invoke the WRIT Jurisdiction. Is this my advice is correct?

Please advise me any other way out.

Thank you so much for your attention and participation.

AI Summary

Transitional credit claimed in wrong return may attract reversal, interest and show-cause notice risking litigation. Erroneous carry-forward of transitional credit in GSTR-3B instead of via TRAN-1 creates a compliance dispute: the department may require reversal with interest and issue a show-cause notice. Defences noted include substantiating the credit because duty was paid and inputs were used, justifying the claim during verification, and, if an SCN is issued, challenging it through writ jurisdiction, though such carry-forward is likely to attract departmental objection and litigation risk.