The judgement now allows assessees to claim pending ITC till June 30, 2020
The Delhi High Court has ruled that time limit for collection of transitional credit or input tax credit (ITC) is a directive and not mandatory. Dubbed a “landmark judgement”, it will benefit affected assessees, regardless of whether they were part of the original petition.
The judgement means all assessees can now claim pending ITC till June 30, 2020, the Hindu BusinessLine reported.
The virtual hearing on May 5 noted that since the rule is ‘directory’, it would be sufficient for it to be substantially complied with, the paper added. The Court, however, added that non-observance of directory provisions could still attract consequences.
Transitional credit is the tax credit (value-added tax (VAT), excise duty, service tax) accumulated till June 30, 2017, before the new goods and services tax (GST) was put in place. All registered dealers could choose between ITC and a composition scheme at the time of transition to GST.
There were, however, many aspects unresolved and petitioners moved to court, filing reaching the high court, seeking to scrap Rule 117 of CGST Rules 2017 which provides a time limit to carry forward tax credit from the previous regime.
“The court clearly mentioned that this benefit of transitional credit will be applicable for three years — that is, the period mentioned in the limitation act ... applicable not only qua the petitioners but to all other petitioners who are facing the hardship of transitional credits,” petitioners’ counsel Abhishek A Rastogi, Partner at Khaitan & Co told the paper.First Anniversary Offer: Subscribe to Moneycontrol PRO’s annual plan for ₹1/- per day for the first year and claim exclusive benefits worth ₹20,000. Coupon code: PRO365
