2024 (4) TMI 992 - HC - GST

Input tax credit - transitional credit - Unutilized amount of Advanced VAT paid - transitional arrangements for input tax credit - Section 140 of the CGST / Telangana GST Act, 2017 - HELD THAT - If the amount of advance tax had remained un-utilised under the VAT or under the TNVAT Act, 2006, it has to be allowed to be transitioned u/s 140 of the TNGST Act 2017. The language of Section 140 (1) of the TNGST Act, 2017 makes it clear that any amount of Value Added Tax and Entry Tax remaining un-utilized in the return shall be allowed to be transitioned and such a registered person is entitled to take credit of such amount in his electronic credit ledger. Therefore, there is no scope for denying such amount which was transited u/s 140 of the TNGST Act, 2017. Thus, no reasons to sustain the impugned order. Therefore, the impugned order passed by the respondent in GSTIN stands quashed. Accordingly, the Writ Petition stands allowed. No costs. Consequently, the connected miscellaneous petition is closed.

Summary

Issues:
The issues involved in the judgment are the denial of transitional tax remaining unutilized in VAT returns and the interpretation of Section 140 of the TNGST Act, 2017.

Denial of Transitional Tax:
The petitioner challenged the order denying the transitional tax remaining unutilized in VAT returns filed for July 2017. The petitioner, engaged in the sale of ceramic tiles, imported tiles from various states and paid advance tax at Tuticorin port. The petitioner sought to transition the unutilized advance tax under Section 140 of the TNGST Act, 2017. The petitioner argued that the impugned order should be quashed as there was no scope for denying the transition of unutilized advance tax.

Interpretation of Section 140 of TNGST Act, 2017:
The Additional Government Pleader contended that only input tax credit unutilized as of June 30, 2017, could be transitioned under Section 140. He argued that the petitioner could seek a refund for the unutilized advance tax but could not transition it. The Government Pleader emphasized that advance tax was not equivalent to input tax credit. He suggested that the petitioner could pursue remedies before the Appellate Authority under Section 107 of the TNGST Act, 2017.

Judicial Interpretation and Decision:
The Court considered arguments from both sides and reviewed the VAT returns filed by the petitioner, confirming the unutilized balance. Referring to Section 140 of the TNGST Act, 2017, the Court highlighted that any unutilized VAT or entry tax amount must be allowed to be transitioned. Citing precedents, the Court emphasized that validly availed input tax credit could not be denied and should be carried forward for adjustment under the GST regime.

Final Decision:
The Court allowed the writ petition, directing the respondents to enable the petitioner to rectify or manually file the necessary forms for transitioning the unutilized tax amount. The Court emphasized that officers under the GST Act must adhere to limitations and granted 90 days for the completion of the transition process. The impugned order was quashed, and the writ petition was allowed without costs.