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2019 (7) TMI 1395 - HC - VAT and Sales TaxAdjustment of Input Tax Credit - outstanding declaration forms under CST Act as on 30.6.2017 (e.g. C forms) - Effect of migration to GST regime - Validity of clause 12.5(c) of Part IV of Form 205B prescribed by Notification No.(GHN-05) VAR- 2018(47)/TH dated 19.1.2018 - filing of final return in Form 205B without requirement of reduction of input tax credit under clause 12.5(c) of Part IV read with Annexure V of the said Form - whether clause 12.5(c) of Part IV of Form 205B is ultra vires the provisions of the Value Added Tax Act, 2003? HELD THAT - the input tax credit shown in the monthly return in Form 201 for the months of April, May and June 2017 will be allowed against the admitted output tax in accordance with the monthly return in Form 201 and thereafter if any input tax credit remains, the same would be reduced in accordance with Annexure-V to Form 205B. - the brought-forward input tax credit as well as the input tax credit to be carried forward from 1.7.2017 onwards would be adjusted as per clause 12.5(c) of Part IV of Form 205B. - Rule 117 of the Gujarat Goods and Services Tax Rules read with Form GST TRAN-1 provides the mechanism for computing the input tax credit attributable to pending declaration forms. The grievance as sought to be redressed should not survive - this writ-application is disposed of without going into the issue as regards the legality and validity of clause 12.5(c) of Part IV of Form 205B prescribed by the Notification No.(GHN-05) VAR-2018(47)/TH dated 19.1.2018.
Issues Involved:
1. Validity of Clause 12.5(c) of Part IV of Form 205B. 2. Adjustment of input tax credit under the VAT Act. 3. Procedural requirements for final returns post-GST implementation. 4. Competence of the State Government in prescribing tax credit adjustments. 5. Impact of pending declaration forms on tax liability. Detailed Analysis: 1. Validity of Clause 12.5(c) of Part IV of Form 205B: The petitioners challenged Clause 12.5(c) of Part IV of Form 205B, arguing that it is ultra-vires the provisions of the VAT Act and the rules framed thereunder. They contended that this clause required the reduction of input tax credit based on outstanding declaration forms under the Central Act, which was not supported by any statutory provision. The court noted that the petitioners had already utilized the input tax credit in monthly returns filed in Form 201 for April to June 2017, and such credit could not be reduced by a column in the final return form. 2. Adjustment of Input Tax Credit under the VAT Act: The petitioners argued that Section 13 of the VAT Act and Rule 18 of the VAT Rules provided for the adjustment of input tax credit against the liability under the VAT Act and the Central Act. They claimed that the impugned clause in Form 205B created a fresh liability without any statutory basis. The respondents clarified that the input tax credit shown in the monthly returns for April to June 2017 would be allowed against the admitted output tax, and any remaining credit would be adjusted as per Annexure-V to Form 205B. 3. Procedural Requirements for Final Returns Post-GST Implementation: The petitioners highlighted that the rule for furnishing final returns was a procedural rule introduced due to migration into the GST regime. They argued that Clause 12.5(c) in Form 205B, which sought to create a fresh liability based on outstanding declaration forms, was beyond the competence of the State Government. The respondents explained that the final return in Form 205B was prescribed under Rule 44(4) of the VAT Rules, and the adjustment of input tax credit was in accordance with the provisions of the VAT Act and the GST regime. 4. Competence of the State Government in Prescribing Tax Credit Adjustments: The petitioners contended that Section 13 of the VAT Act did not empower the government to disallow input tax credit by introducing a column in the final return form. They argued that any reduction of input tax credit should be supported by substantial statutory provisions. The respondents maintained that the adjustments were in line with the statutory framework and the transition to the GST regime. 5. Impact of Pending Declaration Forms on Tax Liability: The petitioners argued that the reduction of input tax credit based on pending declaration forms resulted in a situation where they would become liable to pay tax under the VAT Act despite having no liability as per the VAT provisions. The respondents clarified that the input tax credit attributable to pending declaration forms would be adjusted as per the prescribed rules, and any negative balance would be considered at the time of assessment. Conclusion: The court, considering the respondents' stance and the clarifications provided, concluded that the petitioners' grievance did not survive. The writ-application was disposed of without addressing the legality and validity of Clause 12.5(c) of Part IV of Form 205B. The court noted that the petitioners had no further grievance to redress in light of the respondents' explanations.
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