The Kerala High Court, in M/s. AVT McCormick Ingredients Pvt. Ltd. v. Union of India and Others, has dismissed a writ petition challenging the rejection of a GST refund claim involving transitional input tax credit. The Court held that the assessee failed to produce satisfactory material establishing that the disputed transitional credit was available in its Electronic Credit Ledger as on 1 July 2017. The Court also declined to exercise its discretionary writ jurisdiction where the statutory period for filing an appeal had already expired.
Case Details
Case: M/s. AVT McCormick Ingredients Pvt. Ltd. v. Union of India and Others
Court: High Court of Kerala at Ernakulam
Bench: Justice Johnson John
Case No.: W.P.(C) No. 12964 of 2019
CNR: KLHC010325432019
Neutral Citation: 2026:KER:62583
Date of Judgment: 20 August 2026
Background
The petitioner, engaged in the export of spice extracts and oleoresins, had been registered under the erstwhile Kerala Value Added Tax Act, 2003. After introduction of GST, it filed Form GST TRAN-1 for carrying forward excess input tax credit from the earlier VAT regime into its Electronic Credit Ledger.
While claiming refund of input tax credit for November 2017, the petitioner included SGST transitional credit of Rs. 49,54,739 in the computation of Net ITC. The Department rejected this portion of the refund claim on the ground that the transitional credit did not pertain to the relevant tax period for purposes of Rule 89(4) of the CGST Rules, 2017.
The petitioner challenged the Order-in-Original dated 15 October 2018 directly before the High Court.
Transitional Credit Treated as Opening Balance
The High Court examined Section 140 of the CGST Act read with Rule 117 of the CGST Rules and observed that transitional credit represents the closing balance of eligible taxes under the erstwhile regime carried forward into GST.
Accordingly, unutilised input tax credit available as on 30 June 2017 would, subject to fulfilment of the statutory requirements, be available as the opening balance of unutilised credit as on 1 July 2017.
However, the Court found that the petitioner had not produced a copy of the relevant Form GST TRAN-1 declaration or other satisfactory material proving that the disputed amount stood credited in the Electronic Credit Ledger as on 1 July 2017.
In the absence of such evidence, the Court found no ground to interfere with the adjudicating authority’s rejection of the refund.
Writ Jurisdiction Cannot Revive a Time-Barred Remedy
A significant aspect of the judgment concerns the petitioner’s failure to pursue the statutory appellate remedy within limitation.
The Court noted that Sections 107 and 108 of the CGST Act provide statutory mechanisms against an adjudication order. The writ petition had admittedly been instituted only after expiry of the prescribed period for filing the statutory appeal.
Referring to Supreme Court precedents, the High Court reiterated that although no specific period of limitation is prescribed for invoking Article 226 of the Constitution, writ jurisdiction must ordinarily be invoked within a reasonable period.
A person who, by failing to act within the prescribed statutory period, has disabled himself from pursuing the alternative remedy cannot ordinarily use Article 226 to revive a cause of action that has become unenforceable by limitation.
The Court emphasised that the width of constitutional jurisdiction does not permit the High Court to routinely disregard limitation periods forming part of the legislative scheme.
Decision
The Kerala High Court held that the petitioner had failed to establish through satisfactory material that the transitional credit claimed as refund was available in its Electronic Credit Ledger as on 1 July 2017.
The Court further held that its discretionary jurisdiction under Article 226 could not be exercised to resurrect a cause of action after the petitioner had allowed the statutory appellate remedy to become time-barred.
Accordingly, W.P.(C) No. 12964 of 2019 was dismissed.
Key Takeaway
The judgment highlights two important principles for GST litigation. First, an assessee seeking refund involving transitional credit must be able to substantiate, through the relevant TRAN-1 declaration and supporting records, that the credit was validly carried forward into the Electronic Credit Ledger. Second, Article 226 cannot ordinarily be used as a substitute for a statutory appeal after the assessee has allowed the statutory limitation period to expire.
Taxpayers challenging GST adjudication orders should therefore preserve documentary evidence relating to transitional credit and pursue appellate remedies within the statutory timelines.