Transitional credit

[SUBRATA RAY]

My query is whether VAT suffered on MRP goods as 1st stage dealer and not taken credit in vat regime would be entitle to take credit as transitional credit on the stock as on 30.06.2017 on the basis of tax invoice of VAT regime

[Rajagopalan Ranganathan]

Sir,

As per Section 140 (1) of CGST Act, 2017 "a registered person, other than a person opting to pay tax under section 10, shall be entitled to take, in his electronic credit ledger, the amount of CENVAT credit of eligible duties carried forward in the return relating to the period ending with the day immediately preceding the appointed day, furnished by him under the existing law within such time and in such manner as may be prescribed.

According to Rule 117 (1) of CGST Rules, 2017 "Every registered person entitled to take credit of input tax under section 140 shall, within ninety days of the appointed day, that is 01.07.2017, submit a declaration electronically in FORM GST TRAN-1, duly signed, on the common portal specifying therein, separately, the amount of input tax credit 1[of eligible duties and taxes, as defined in Explanation 2 to section 140] to which he is entitled under the provisions of the said section.

Simiar provisions are made under State Goods and Service Act of the respective States.

Since you had not taken the credit prior to 01.07 2017 and had not shown in the prescribed returns file under VAT Act, now it is impossible to take the credit on the stock as on 30,06.2017.

[KASTURI SETHI]

Must try to file TRANS-2 now in the light of Supreme Court Order dated 27.7.22. - UNION OF INDIA & ANR. VERSUS FILCO TRADE CENTRE PVT. LTD. & ANR.

AI Summary

Transitional credit denied where VAT credits were not reflected in pre-GST returns, limiting stock input tax claims.
A person may claim transitional CENVAT/input tax credits only if such credits were disclosed in pre-GST returns and migrated via the prescribed procedure (FORM TRAN-1 within the specified window); failure to take or disclose the credit before the appointed day renders the credit for stock on hand as of that day inadmissible through the standard TRAN-1 migration. Respondents note that filing FORM TRAN-2 and subsequent judicial developments may affect available procedural remedies.