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

Transitional credit procedural lapse: challenge SCN and seek regularisation of credit while exhausting departmental remedies.
The issue concerns transitional credit taken in FORM GSTR 3B instead of by TRAN 1, prompting a show cause notice demanding interest under Section 50. Although the VAT credit appears bona fide, the procedural requirement under Section 140 and Rule 117 was not followed. Administrative advisories and some precedents permit reconciliation and regularisation where no double credit occurred or where portal failures prevented TRAN 1 filing, but the department can disallow credit and impose interest or penalties; exhausting departmental remedies and citing favourable cases at personal hearing is the recommended approach prior to filing writs.