2026-VIL-1216-GUJ
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VAT High Court Cases

Gujarat VAT Act, 2003 - Set off of available Input Tax Credit against tax liability under the VAT Act and CST Act before carry forward through GST TRAN-1 – Respondent was assessed to a CST demand for failure to produce C Forms, and its appeal before the FAA was dismissed for non-payment of pre-deposit - Tribunal in second appeal held that the available surplus ITC under the GVAT Act was first to be adjusted against the tax liability under the VAT Act and CST Act, leaving carry forward ITC lower than claimed in TRAN-1 and dispensed with pre-deposit and remanded the matter - Whether the Tribunal was justified in directing that the available ITC be adjusted against the tax liability under the VAT Act and CST Act and the balance alone be carried forward - HELD - It is not in dispute that surplus ITC was available for adjustment against the tax liability under the GVAT Act and CST Act. The Tribunal was therefore justified in directing the FAA to adjust the available ITC against the tax liability and to determine the balance ITC available to be carried forward - The decisions cited by the State, though accepted as correct, do not apply on the facts, since the question here is entitlement to set off under the VAT Act - The Tribunal was justified under the provisions of the VAT Act in holding that the assessee was entitled to set off of the tax payable against the available ITC - The Revenue appeal is dismissed - Remedy of the VAT Department where ITC carried forward in TRAN-1 exceeds the credit actually available - Rule 117 and Rule 121 of the GST Rules, 2017 - State contended that the Assessing Officer was justified in considering the ITC carried forward in TRAN-1 to deny set off and to tax the differential amount which was not available for carry forward - Tribunal observed that it was open to the Government to take remedial steps - Whether the VAT authorities can tax the differential amount on the ground of excess credit carried forward in TRAN-1 - HELD - Under Rule 117(3) the amount of credit specified in TRAN-1 can be credited to the electronic credit ledger, and under Rule 121 the GST Department may verify the amount so credited and initiate proceedings under Section 73 or Section 74 of the GST Act in respect of any credit wrongly availed, wholly or partly. The Assessing Officer ought to have informed the concerned GST Department of the amount of credit not available to the assessee, since the available ITC was required to be adjusted against the tax liability under the GVAT Act and CST Act and only the balance was available for carry forward - It is for the GST Department to take action under Rule 121 for any wrong ITC availed through TRAN-1, and the only remedy available to the VAT Department is to inform the concerned GST officer of such facts coming to its knowledge - The contention of the State is not accepted and the order of the Tribunal is sustained.
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