Order Date: 3 February 2023

Parties: M/s P & C Projects Pvt Ltd V/s Assistant commissioner (ST) (FAC)

Facts –

• The Petitioner M/s P & C Projects Pvt Ltd has requested the to allow carrying forward of unutilized VAT TDS to the new GST regime, which was rejected by authorities without providing any material reasons.
• Petitioner thinks this is against the principal of natural justice allow the TDS amount of Rs. 5,42,19,976 paid as eligible input credit, so filed this petition. 

Issue –

• Whether authorities were right in rejecting petitioner’s request under section 140 (1)?

Order –

• The Hon’ble Madras High Court observed that authorities have rejected the request of Petitioner’s for carrying forward of unutilized VAT TDS to the new GST regime without giving any reason. There is a distinction between the Income Tax Act and the Sales Tax Act insofar as the concept of carry forward of credit does not form part of the scheme of the IT Act. Under the IT Act, an amount paid as advance tax or amount deducted as tax will have limited use only for assessment year.
• Section 140 of the Act talks of carrying forward of the credit of VAT and Entry Tax under the existing law so stand of the petitioners to the effect that such amounts would stand included for the purposes of transition under Section 140 is correct. In Magma Fincorp Ltd. V. State of Telangana 2019 the High Court at Telangana has considered this very issue, interpreting Section 140 purposively which states that once it is admitted that credit was available to the petitioner on the date of switch over from VAT regime to GST regime and he is entitled to claim such credit.
• So, the court directs that impugned order is quashed and hence petitioner is entitled to transition TDS under the TNVAT Act in terms of Section 140 of the TNGST Act, 2017, Writ petition allowed.