Transitional ITC of VAT allowable, despite non availment of option to claim its refund under VAT law

M/s. Magma Fincorp Limited Vs State of Telangana (Telangana High Court)

It is not stated in the impugned order that Section 140 does not have any application to the case on hand. All that is stated in paragraph 2 of the impugned order is that it is only the amount available as ITC in the VAT DCB for the month of June 2017 that the petitioner is eligible for claiming it as transitional relief. But, this is not supported by the provisions of Sections 16 to 21 of the TGST Act, 2017 so as to make the case of the petitioner fall under the first contingency contemplated in the first proviso to sub-section (1) of Section There is also no complaint by the respondents that the petitioner failed to furnish all the returns required under the existing law for the period of six months immediately preceding the appointed day.

Even while rejecting the claim for transitional relief, the second respondent has not only admitted the availability of excess credit in favour of the petitioner, but has also conceded that he petitioner may either claim refund or adjust their liability against pending assessments under the VAT or CST Acts. But, it appears that no assessment is pending either under the VAT Act or under the CST Act. Therefore, the only way the petitioner can make use of this credit, even according to the second respondent, is to make a claim for refund. But, we do not know what difference it would make for the respondents, whether the petitioner seeks refund or seeks adjustment of their liability under the GST regime.

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 As he has failed to do the same, the matter requires reconsideration.

Therefore,the writ petition is allowed and the impugned order is set aside and the matter remanded back to the second respondent for a fresh consideration in the light of the observations contained in this The second respondent may pass fresh orders within a period of 4 weeks from the date of receipt of a copy of this order.

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