VAT ITC Refund Cannot Be Claimed without TRAN-1 Post-GST: Allahabad HC Holds Refund on Capital Goods [Read Order]
Once GST started, all transitional claims had to comply with the statutory provisions of the CGST Act, including the requirement to file TRAN-1. Since the assessee did not avail this mandatory route, the unutilised VAT ITC lapsed.
In a recent recent, the Allahabad High Court has held that refund of unutilised Input Tax Credit ( ITC ) accumulated under the repealed UP VAT Act cannot be claimed after the introduction of GST ( Goods and Services Tax ) unless the assessee files TRAN-1, the statutory form for transitional credit under the GST Act.
A revision petition was filed by M/s Madhukesh G Associates, where the Court upheld the Commercial Tax Tribunal’s order denying refund of ITC of ₹3,84,730 on capital goods for AY 2017-18, observing that the assessee neither carried forward the credit through TRAN-1 nor pointed to any statutory provision under the UP VAT Act permitting such refund.
The assessee argued that since GST came into force on 1 July 2017, the instalment-based utilisation of capital-goods ITC under Rule 24 of the UP VAT Rules became impossible, and therefore the accumulated ITC ought to be refunded.
However, the State contended and the Court agreed that VAT Act never gave refund of capital-goods ITC and the only legally recognised mechanism to transition such credit into GST was through timely filing of TRAN-1, which the assessee admittedly failed to do.
Justice Piyush Agarwal also said that claiming ITC or refund must strictly follow the law applicable on the relevant date. Once GST started, all transitional claims had to comply with the statutory provisions of the CGST Act, including the requirement to file TRAN-1. Since the assessee did not avail this mandatory route, the unutilised VAT ITC lapsed.
The High Court rejected the revision and settled the legal question in favor of the Revenue, holding that ITC is a concession that is strictly subject to legislation and that refunds cannot be given in the absence of explicit legislative permission. The court stated that there was no illegality in the Tribunal's opinion.
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