ITC Transition not to be denied in case of Input Service Distributor

Last updated: 23 March 2024

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The Bombay High Court has ruled that Input Service Distributors (ISDs) should not be denied the transition of Input Tax Credit (ITC) available before the GST 'Appointed Day'. The court emphasised that legitimate ITC should not be lost due to a lack of effective procedural mechanisms for its transfer to the Electronic Credit Ledger. The judgement continues an interim stay in favour of the assessee, highlighting the importance of Section 140(7) of the CGST Act.

Court :
Bombay High Court

Brief :
The Hon'ble Bombay High Court in the case of Siemens India Ltd. v. Union of India [Writ Petition No. 986 of 2019 dated February 09, 2024], relying upon sub-section (7) of Section 140 of the Central Goods and Services Tax Act, 2017 ("the CGST Act") adjourned the matter for further hearing and continued the interim stay granted in favour of Assessee being Input Service Distributor ("ISD") on the ground that, ITC which is legitimately available with the Assessee before the Appointed day, cannot be lost or lapsed, merely because of lack of effective procedural mechanism for ITC to be transferred to the Electronic Credit Ledger for utilization, thereby creating a situation of such ITC being permanently lost.

Citation :
Writ Petition No. 986 of 2019 dated February 09, 2024

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Judgement posted by

Bimal Jain

Service

FCA, FCS LLB with21 Yrs of Experience inTaxation Indirect and Direct: Education Qualification: B.Com (Hons) Chartered Accountants Company Secretary LLB Qualified SAP FI/CO Consultants Professional Membership: Chairmanof Indirect Tax Committee of PHD Chamber of Commerce Member of Indirec ... Read more

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