Transition provision for service provider

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This query is : Resolved

Just Archon (Querist)

12 September 2017 Hello,

A service provider registered under service tax has Vat bills paid for purchase of fixed assets during period April 17 to june 17. whether he can get credit under 140(3) of transition rules?

CMA Ramesh Krishnan

CMA Ramesh Krishnan (Expert)

12 September 2017 If you are eligible to take the credit as per earlier laws and taken the same during purchase of assets and show in the returns under earlier law then you can carry forward the same to GST also. else you cannot take now in GST

Just Archon

Just Archon (Querist)

22 September 2017 I was not registered under VAT and so has not utilised that credit under earlier law?
I was only registered under service tax?
So while filing TRAN1 can I get the credit of VAT mentioned on th purchase of Fixed assets and under which section of TRAN I can show the same.?

Aashok Kumar Sharma online

Aashok Kumar Sharma

(Expert)

02 August 2025 Here’s the clarification on your query regarding transition credit under GST for VAT paid on fixed assets when you were only registered under service tax earlier:

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### Key points:

* Under **GST transition rules (Section 140(3))**, Input Tax Credit (ITC) can be carried forward on **inputs, capital goods, and input services** held in stock or on hand as on the transition date (e.g., 1 July 2017).
* **However, to claim ITC under the transition, the credit must have been available and unutilized under the previous law.**

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### Your situation:

* You were **registered only under Service Tax**, **not under VAT**, hence you were **not eligible to claim VAT credit earlier**.
* Since you never claimed VAT credit under the earlier law (because no VAT registration), you **cannot claim credit for VAT paid on purchase of fixed assets now under GST transition**.
* The GST transitional credit is only for those who had VAT registration and unutilized VAT credit at the time of transition.

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### Filing in TRAN-1 form:

* Since you don’t have VAT registration and have not claimed VAT credit earlier, **you cannot show or claim VAT credit on fixed assets in TRAN-1**.
* You can only claim input service credit related to service tax under transition (subject to conditions).

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### Summary:

| Condition | Can you claim? |
| ---------------------------------------------------- | --------------------------- |
| Registered under VAT earlier & unutilized VAT credit | Yes, claimable in TRAN-1 |
| Not registered under VAT, only service tax | No, cannot claim VAT credit |

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**Suggestion:** You may claim ITC on inputs and capital goods under GST only from the date GST became applicable (July 1, 2017) going forward, subject to normal GST rules.

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If you want, I can help you with how to fill TRAN-1 for service tax credits or explain further details. Would you like that?

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