Back
Denies AVT McCormick's Rs 49.54 Lakh Transitional ITC Refund Claim
The has dismissed a writ petition by challenging the rejection of its Rs 49.54 lakh refund claim for . Justice Johnson John held that a refund can be allowed only if the taxpayer proves the credit stood in its as on . The Court also declined to entertain the petition on grounds of delay, as the assessee had failed to exhaust the within the prescribed period.
Case Background
The petitioner, a manufacturer and exporter of spice extracts and oleoresins, was registered under the erstwhile . Upon the introduction of GST, it filed Form GST TRAN-1 to transition unutilised input tax credit from the old regime into its . The TRAN-1 was filed in , and the credit was reflected in the ledger on .
When AVT McCormick sought a refund of ITC for , the Assistant Commissioner issued a show-cause notice proposing rejection. Despite the petitioner's detailed reply, the assessing authority passed an order on disallowing the refund. The order observed that the petitioner's net ITC for the month included Rs 49,54,739 as transitional SGST credit, which had been credited only on and did not pertain to the relevant tax period under .
Aggrieved, AVT McCormick approached the High Court directly under , arguing that pursuing an appeal would be futile because the impugned order was based on a departmental circular that was binding on the appellate authority. The respondents countered that the writ was filed after expiry of the limitation period for appeal and therefore could not be entertained.
Arguments Presented
Senior counsel , appearing for the petitioner, contended that transitional credit represents unutilised input tax from the pre-GST regime and must be treated as the opening balance of the as on . He argued that the adjudicating authority's reliance on Circular No. 37/11/2018-GST was contrary to the statutory provisions under and . The counsel cited decisions of the in and , as well as the in , to support the proposition that transitional credit should be available from the .
For the respondents, Standing Counsel submitted that the petitioner had not produced any material to show that the disputed credit existed in the as on . He relied on to argue that the appellate authority has no power to condone delay beyond the prescribed limit, and on to highlight that the High Court's cannot revive a .
Legal Analysis
The Court examined the framework for transitional credit under read with . It noted that the closing balance of unutilised input tax credit as on , as shown in the last return under the erstwhile regime, should be carried forward as the opening balance in the as on .
However, the Bench found that the petitioner had not produced a copy of the TRAN-1 declaration or any other satisfactory material to establish that the claimed amount was indeed credited into the ledger as on the . In the absence of such proof, the Court saw no reason to interfere with the adjudicating authority's order.
Addressing the preliminary objection on maintainability, the Court observed that the writ petition was filed after the expiry of the statutory period for filing an appeal. Citing the 's decisions in , , and , the Court held that the under cannot be exercised to resurrect a that has become unenforceable due to limitation.
Key Observations
Justice Johnson John made several critical observations in the judgment:
"As per the above said provisions, the transitional credit, closing balance of credit of taxes lying and shown in last return filed by the assessee prior to introduction of CGST i.e., as on 30.06.2017 will be carried forward as credit in as on ."
"The adjudicating authority can allow the refund only if it is proved that the amount claimed was credited into the as on and in the absence of satisfactory material to prove the same, I find no reason to interfere with the impugned order of the adjudicating authority."
"I find that the under of the cannot be exercised to resurrect a which has become unenforceable on account of ."
The Court also emphasised that entertaining such a belated petition would be contrary to the requiring .
Court's Decision
Dismissing the writ petition, the upheld the assessment order that rejected AVT McCormick's refund claim. The practical effect is that the assessee cannot recover the Rs 49.54 lakh in transitional ITC for . The ruling reinforces the requirement for taxpayers to maintain clear documentary evidence of transitional credit being available from the of GST. It also serves as a reminder that is not a substitute for timely statutory remedies, and delay in approaching the High Court can be fatal even if the merits appear arguable.
