M/s GEOJIT FINANCIAL SERVICES LIMITED
Vs.
UNION OF INDIA & ORS.
WP(C) No. 11956 of 2019
DATED: JANUARY 28th , 2025
HIGH COURT
Facts: The Petitioner M/s GEOJIT FINANCIAL SERVICES LIMITED, a service provider, purchased computers and laptops from within Kerala, paying VAT under the Kerala Value Added Tax Act (KVAT Act) prior to the implementation of GST on July 1, 2017. The Petitioner did not have registration under the KVAT Act as it was solely providing services and were not covered under the VAT regime. After GST was introduced, the Petitioner sought to avail transitional input tax credit under the KSGST Act for the VAT paid on the computers and laptops, which were in their closing stock as of June 30, 2017. The Petitioner in the present matter is challenging the ruling passed by the Appellate Authority for Advance Ruling upholding the ruling passed by the AAR wherein, it was held that Petitioner is not entitled to avail transitional credit due to the absence of VAT liability under the KVAT Act.
ISSUE: Whether the Petitioner is entitled to claim transitional ITC under Section 140(3) of the KSGST Act for the VAT paid on computers and laptops purchased prior to the implementation of GST, despite not having any VAT liability under the KVAT Act?
HELD:
The High Court of Kerala ruled in favour of the Petitioner providing entitlement to transitional input tax credit under Section 140(3) of the KSGST Act for the VAT paid on computers and laptops.
The court found that the Petitioner was eligible for input credit under the KSGST Act, as the computers and laptops were held in stock as on June 30, 2017 and were intended for use in making taxable supplies.
The court clarified that while the term “input” under Section 2(59) of the KSGST Act excludes capital goods, the Petitioner’s claim was specifically under Section 140(3), which allowed for transitional credits. The court emphasized that the definition of “capital goods” should not preclude the Petitioner from claiming transitional credit for items that were not capitalized in their books.
The court acknowledged that the Petitioner did not have VAT liability under the KVAT Act, but this did not negate its right to claim transitional credit for the VAT paid on the goods in question.
The court set aside the Appellate Order and earlier rulings passed by the Advance Ruling Authority which denied the Petitioner’s claim, directing the Respondents to reconsider the claim in light of the court’s findings.
Held that there cannot be any doubt regarding the entitlement of the Petitioner for transitional credit under Section 140(3), especially since the Petitioner is eligible for input credit as against the computers/laptops under the KSGST Act. Thus, the Petitioner is entitled to transitional credit under Section 140(3) of the KSGST Act.
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