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

ISD credit transition under Section 140(7): pre GST service tax ISD credits may be transitioned into GST despite objections.
Whether undistributed Input Service Distributor (ISD) credit under service tax as on the transition date can be carried into GST via TRAN 1 is disputed: Section 140(1) is said not to permit such transition, but Section 140(7) contemplates distribution of pre GST ISD credit and is argued to have overriding effect. The practical position advanced is that eligible vested ISD credit may be transitioned and distributed under GST, including undistributed pre GST credits, subject to ongoing litigation and interim orders.