The indirect tax department is currently grappling with notices from courts issued in response to writ petitions filed against several clauses of the GST Act. Tax officials say unfavourable rulings in some of these cases could have adverse revenue implications for the government. In petitions admitted by the Delhi High Court, petitioners have argued that assessees should be allowed to claim transitional credit on pre-GST goods purchased more than a year before the GST rollout. The GST law restricts such credit for invoices issued not before June 30, 2016. However, it has been argued that such restrictions go against the stated motive of the GST to avoid cascading of taxes.
Last year, the government had launched a probe into what it termed as ‘unusually high’ claims of transitional credit, as it suspected large-scale frauds. An unfavourable order could see the government facing higher credit claims. Further, the Uttarakhand High Court has admitted a petition challenging the government notification disallowing transitional credit on capital goods for firms operating under the erstwhile area-based excise exemption scheme. If this is allowed, the government may have to pay a hefty bill.
Read More at: https://www.financialexpress.com/economy/gst-act-tax-dept-grapples-with-writs-filed-against-clauses/1415875/