Central GST Act says the transitional credit to be given only if stocks were not purchased more than a year before the implementation
All eyes are on the ruling of the Delhi high court on a petition seeking removal of a provision that denies transitional credit for stocks purchased more than one year before the goods and services tax (GST) was implemented, after the Bombay high court had upheld the constitutional validity of such a provision.
Delhi HC posted the matter for next month after hearing arguments in the case. Such credits are given to traders or dealers and not manufacturers.
Abhishek Rastogi, a counsel for the petitioner, argued that while there is a one-year restriction for such a credit for those having invoice, the credit for over one year stock is provided with some concession to those not having invoice.
This is arbitrariness, he said.
The clause IV of section 140 (3) of the Central GST Act says the transitional credit to be given only if stocks were not purchased more than a year before the implementation of GST on July one, 2017.
However, those not having invoices can get the credit to the extent of 40-60 per cent even if the stock is one year older on the date of July one 2017.
Earlier, the Bombay HC had upheld the constitutional validity of one year limitation for GST transitional credit.
Source : http://www.business-standard.com/article/economy-policy/goods-and-services-tax-delhi-high-court-to-decide-on-transitional-credit-118042300026_1.html