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.

[Shilpi Jain]

The rightly eligible credit is a vested right and its transition should not be denied under GST. A very good case to fight.

Below are relevant cases

Samsung India challenges SCN proposing transitional-credit recovery from ISD before P&H HC

2024 (4) TMI 410 - PUNJAB AND HARYANA HIGH COURT

P&H HC issues Notice of Motion, grants ad-interim stay over proceedings arising out of SCN issued to Samsung India - 2024 (4) TMI 554 - PUNJAB AND HARYANA HIGH COURT [(Input Service Distributor (ISD)] u/s 74 of the CGST Act r/w Rule 121 of the CGST Rules, seeking recovery of transitional credit; SCN proposed recovery of credit transitioned u/s 140 of the CGST Act by the Petitioner through Form TRAN-1 on the ground that ISD was not permitted to transition the credit under the GST Regime...

Recently, Bombay HC [2024 (3) TMI 272 - BOMBAY HIGH COURT], while hearing a batch of writs on whether Input Service Distributors (ISDs) are entitled to transition the undistributed credit lying with them as on June 30, 2017 has sought GST Council's assistance in taking appropriate view of the matter

[KASTURI SETHI]

Dear Querist,

Yes. Section 140(7) of CGST Act will have overriding effect. ISD credit of Service Tax  pertaining  to pre-GST era can be transitioned, even if invoices are received after 30.6.17

[KASTURI SETHI]

Also see the judgement of Bombay High Court in the case of Siemens India Ltd. Vs. UOI (2024 (3) TMI 272 - BOMBAY HIGH COURT). Stay already granted in favour of the party will continue. Next date of hearing 09.8.2024.

[Ganeshan Kalyani]

I agree with the view of the experts

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.