Transition of closing balance of ISD as on 30.06.2017 into GST

[SHREE CEMENT]

We had closing balance of ISD Credit under Service Tax as on 30.06.2017 and carried forwarded the same through TRAN-1 form under GST. Now the department is objecting the same by stating that ISD balance cannot be transferred to GST through TRAN-1 as Section 140(1) is not allowing transition of ISD credit into GST. Whereas Section 140(7) is allowing the distribution of ISD credit of Service Tax in GST regime and the same is having overriding effect of all other provisions.

Please have the considered opinion on the same.

AI Summary

Debate on Transitioning ISD Credit to GST: Section 140(1) vs. 140(7); Cited Cases Include Samsung and Siemens A company raised a query about transitioning Input Service Distributor (ISD) credit from the Service Tax regime to the Goods and Services Tax (GST) regime using the TRAN-1 form. The tax department objected, citing Section 140(1) of the CGST Act, which does not permit ISD credit transition. However, Section 140(7) allows distribution of ISD credit under GST, potentially overriding other provisions. Respondents argued that transitioning ISD credit is a vested right and cited relevant court cases, including those involving Samsung India and Siemens India Ltd., where courts have granted stays or sought further clarification on the issue.