2019 (5) TMI 786 - HC - GST

Input tax credit - transitional arrangements for input tax credit - Section 140 of the Telangana GST Act, 2017 - HELD THAT - Once it is admitted that credit was available to the petitioner on the date of switch over from VAT regime to GST regime and once it is admitted that the petitioner may be entitled to make a claim for this credit in other modes, we think that the second respondent ought to have given a purposive interpretation to Section 140 of the Act read with Sections 16 to 21 of the Telangana GST Act 2017. As he has failed to do the same, the matter requires reconsideration. The matter is remanded back to the second respondent for a fresh consideration - petition allowed by way of remand.

Issues Involved:
1. Multiple notices by different persons holding the office at different points of time.
2. Applicability of the provisions of law cited in the impugned order.
3. Simultaneous invocation of sections 73 and 74 of the Telangana Goods and Services Act, 2017.
4. Rule 120 overriding the Act.
5. Non-satisfaction of the three conditions laid down in the proviso to Section 140(1) of the Act.
6. Relevance of the CCT circular dated 12.05.2015 to the GST law.
7. Consideration of various contentions raised by the petitioner in their reply.

Analysis:

1. Multiple Notices:
The petitioner contended that multiple notices issued by different persons holding the office at different times are legally unsound. The court did not specifically address this issue in detail but focused on the substantive legal issues regarding the transitional credit.

2. Applicability of Provisions of Law:
The petitioner argued that the impugned order was based on inapplicable legal provisions. The court noted that the respondents admitted the availability of excess credit to the petitioner but argued that the Telangana GST Act does not provide for the utilization of NCCF as transitional relief. The court found that the petitioner’s claim was not illusory or stale but was for something they were entitled to, even according to the respondents.

3. Simultaneous Invocation of Sections 73 and 74:
The petitioner argued that invoking sections 73 and 74 simultaneously was incorrect. The court did not address this issue directly but focused on the broader issue of the petitioner’s entitlement to transitional credit under Section 140 of the Telangana GST Act.

4. Rule 120 Overriding the Act:
The petitioner contended that Rule 120 cannot override the Act. The court emphasized the need for a purposive interpretation of Section 140 of the Telangana GST Act, 2017, and found that the second respondent failed to provide such an interpretation.

5. Conditions Laid Down in Proviso to Section 140(1):
The court examined the conditions under the first proviso to Section 140(1) of the Act, which stipulates that credit cannot be taken if it is not admissible as ITC under the Act or if the registered person has not furnished all required returns. The court found that the respondents did not claim that the petitioner’s case fell under these contingencies.

6. Relevance of CCT Circular Dated 12.05.2015:
The petitioner argued that the CCT circular dated 12.05.2015 had no application to the GST law, which came into effect in 2017. The court did not specifically address this argument but focused on the petitioner’s entitlement to transitional credit under the Telangana GST Act.

7. Consideration of Petitioner’s Contentions:
The petitioner claimed that the impugned order did not address various contentions raised in their reply. The court found that the second respondent admitted the availability of excess credit and the petitioner’s entitlement to claim it in other forms, such as a refund or adjustment of liabilities. The court concluded that the second respondent should have given a purposive interpretation to Section 140 of the Act.

Conclusion:
The court allowed the writ petition, set aside the impugned order, and remanded the matter back to the second respondent for fresh consideration in light of the court’s observations. The second respondent was directed to pass fresh orders within four weeks. The court emphasized that the petitioner’s claim for transitional credit was legitimate and required a purposive interpretation of the relevant legal provisions.

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