GSTAT rules GST authorities cannot examine pre-GST transitional credits

The Goods and Services Tax Appellate Tribunal (GSTAT) has ruled that GST authorities lack the jurisdiction to examine the admissibility of transitional input tax credit (ITC) carried over from the pre-GST regime. In a case involving Tata Unistore Limited, the GSTAT Thane Bench set aside an order demanding the repayment of disputed CENVAT, Krishi Kalyan Cess, and VAT credits.

The Tribunal held that under Sections 142(6)(a) and 174 of the CGST Act, proceedings regarding inadmissible credit from the previous tax regime must be initiated under those specific erstwhile laws. It determined that GST authorities cannot use Section 140 to re-assess the correctness of credits that were disclosed in prior service tax or VAT returns and were not disputed during that period.

The GSTAT serves as a specialized statutory body and the second appellate authority for GST disputes. Following years of delays, the Tribunal has become operational with a Principal Bench in New Delhi and 31 State Benches across approximately 43 locations in India, aimed at reducing the burden on higher courts and providing expert resolution for tax conflicts.