Transitional Credit

[THYAGARAJAN KALYANASUNDARAM]

Dear Experts,

One of my clients has taken the VAT credit in GSTR-3B in the month of July 2017 instead of taking the credit through by filing TRAN-1 form. This credit belonging to VAT Credit against the Export of Goods. Presently, my client is under Central Jurisdiction, and the audit team came for Audit and found this error to the tune of ₹ 30 Lakhs. Accordingly, my client has excessive credit in the GST, based on that coercive action my client has reversed the credit under protest.

Now, my client has received the SCN from the department and asking for Interest for the wrong availment of transition credit.

My query is, can I file a writ petition before the court and direct the authority to accept the fresh TRAN-1 and allow the credit. And also waive the Interest u/s 50 of the CGST Act.

Please suggest me and also, kindly share suitable citations in order to overcome this issue.

Thanks in Advance.

AI Summary

Client Faces Interest Demand for Mistaken VAT Credit Claim; Experts Suggest Procedural Error, Advise Caution with Legal Action A client mistakenly claimed VAT credit through GSTR-3B instead of the required TRAN-1 form, resulting in an audit finding of excessive credit of 30 Lakhs. The client reversed the credit under protest but received a Show Cause Notice (SCN) demanding interest for the incorrect claim. Experts suggest this is a procedural error, not a substantive one, and advise exhausting departmental remedies before filing a writ petition. Some experts recommend citing favorable case laws if pursuing legal action. The client is advised to proceed cautiously, considering the potential for delays and legal costs.