Madras HC: No Carry Forward of ITC Be Forced On the Dealer

Dealers cannot be forced to carry forward Input Tax Credit (ITC) from the current system to the Goods and Services Tax (GST) Regime if they opt to claim a refund instead, according to a recent ruling by a single bench of the Madras High Court.

On behalf of the revenue, Amirta Dinakaran said that the dealer claimed it had inadvertently reversed the GST ITC in June 2017 and that this had resulted in the issuance of the disputed notice.

The Court observed that “the dealer has two options i.e., refund or carrying forward the input tax credit to GST regime, the dealer in the case on hand, has opted for the former not the latter. The common portal giving dealers the option for choosing former or latter also is now active till 2024. In such circumstances, the dealer cannot be compelled to opt for one of the two i.e., refund or carrying forward the ITC to the GST regime. It is after all an option given to the dealer.”

Recommended: GST ITC on Services for Promotional Schemes Not Available

The single bench of justice M Sundar sees that “In the case on hand, the case of writ petitioner dealer stands buttressed by the provisional refund order made by the same sole respondent and issue of what is referred to as ‘FORM-P’ clearly quantified the entitlement of writ petitioner at Rs.13,36,741/-.”

Thus, the Madras High Court noted that in addition to the issuance of FORM-P, the refund had already been processed by Revenue and a provisional refund order had been issued.

The respondent was further instructed to make sure that the writ petitioner receives the GST refund specified in the provisional refund order and the FORM-P that is attached to it as soon as possible (note that the amount is Rs. 13,36,741/- INR, Rs. Thirteen Lakhs Thirty-Six Thousand Seven Hundred and Forty-One Only).