Proceedings For Transitional Credits Availed Under Erstwhile Haryana VAT Cannot Be Initiated Under GST Sections 73 and 74

By | September 5, 2026
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Proceedings For Transitional Credits Availed Under Erstwhile Haryana VAT Cannot Be Initiated Under GST Sections 73 and 74
Issue
Whether tax authorities possess jurisdiction under Sections 73 and 74 of the Central Goods and Services Tax (CGST) Act, Punjab GST Act, and Haryana GST Act to initiate proceedings or adjudicate disputes regarding input tax credits availed under the erstwhile Haryana Value Added Tax (VAT) Act.
Facts
  • The petitioners challenged the initiation and proposed adjudication of proceedings under Sections 73 and 74 of the CGST, PGST, and HGST Acts.
  • The dispute pertained to input tax credits that were availed under the pre-GST regime under the erstwhile Haryana Value Added Tax Act.
  • The tax department sought to invoke GST determination provisions (Sections 73 and 74) to recover or disallow transitional credits relating to the VAT era.
  • The petitioners relied on judicial precedents, including the decision of the Jharkhand High Court in Usha Martin Ltd. v. Additional Commissioner, Central GST and Excise, which addressed an identical issue on pre-GST credits.
Decision
  • The High Court held that proceedings concerning credits availed under the erstwhile Haryana VAT Act cannot be initiated or adjudicated under Sections 73 and 74 of the GST Acts.
  • Credits availed under pre-GST VAT legislation fall outside the sweep and domain of GST determination provisions contained in Sections 73 and 74.
  • Actions predicated on Sections 73 and 74 for such pre-GST VAT credits were held to be without jurisdiction and legally unsustainable.
  • Consequently, the writ petitions were allowed in favor of the assessees.
Key Takeaways
  • Lack of GST Jurisdiction for Pre-GST Credits: Tax authorities cannot invoke Sections 73 and 74 of the CGST/HGST/PGST Acts to adjudicate or recover tax credits originated and availed under erstwhile state VAT laws.
  • Transitional Boundary: Pre-GST VAT credits remain governed by erstwhile VAT statutory mechanisms and specific transitional rules, not standard GST determination procedures.
  • Invalidation of Proceedings: Any show-cause notice or adjudication order initiated under GST Sections 73/74 concerning legacy VAT credits is void ab initio for lack of jurisdiction.
HIGH COURT OF PUNJAB & HARYANA
Shiv Shakti Trading Co.
v.
State of Haryana
Ashwani kumar Mishra, ACJ.
and Rohit Kapoor, J.
CWP Nos. 2687 of 2021, 3995 of 2022, 14187 & 16062 of 2023, 5200 & 25935 of 2024 and 16447 of 2025 (O & M)
JULY  22, 2026
Sandeep Goyal, Tarun Gulati, Sr. Advs., Rishab Singla, Ms. Aakriti, Aditya Gupta, Rishab Bansal, Sandeep Chilana, Priyojeet Chatterjee, Tushar Sharma, Chetan Jain and Porush Jain, Advs. for the Petitioner. Sourabh Goel, Saurabh Kapoor, Addl. A.Gs., Rishabh Kapoor, Ajay Kalra, Sr. Standing Counsels, Ms. Isha Janjua, Adv. and Gurinder Jit Singh, Sr. Panel Counsel for the Respondent.
ORDER
Ashwani Kumar Mishra, Actg. C.J.- Controversy raised in the present petitions stands concluded by the Division Bench of the Jharkhand High Court in Usha Martin Ltd. v. Additional Commissioner, Central GST and Excise [2022]   [2023] 68 GSTL 338 (Jharkhand)/[2024] 124 GSTR 396 (Jharkhand), against which Special Leave Petition (SLP) has also been dismissed by the Hon’ble Supreme Court on 17.04.2026.
2. On 20.07.2026, the following order was passed:-
“The counsel for the petitioner(s) placed reliance upon judgment of Jharkhand High Court in Usha Martin Limited v. Additional Commissioner, Central GST and Excise, Jamshedpur and others, [2024] 124 GSTR 396 (Jharkhand) which is followed in Steel Authority of India Limited v. State of Jharkhand & ors. 2025 SCC OnLine Jhar 436, against which the SLP(C) Diary No.18250/2026 has been dismissed by the Hon’ble Supreme Court on 17.04.2026. It is therefore, submitted that this matter can also be disposed of in the same terms.
Learned counsel for the respondents-authorities seeks short indulgence to examine the matter.
Put up 22.07.2026.
A photocopy of this order be placed on the files of connected cases.”
3. We have heard learned counsel for the parties at substantial length. We find that the issues raised in the present matter have already been adjudicated upon by the Jharkhand High Court in Usha Martin Ltd. (supra). The said judgment has been followed by a subsequent Bench in Steel Authority of India Ltd. v. State of Jharkhand (Jharkhand)/2025 SCC OnLine Jhar 436. We are in respectful agreement with the view taken therein by the Court.
4. The judgment in Steel Authority of India Ltd. (supra) was tested before the Hon’ble Supreme Court by the State of Jharkhand, wherein the SLP has been also dismissed.
5. Once that be the position, we are of the view that the present petitions also deserve to be allowed for the reasons recorded in Usha Martin Limited (supra). The initiation of proceedings under Sections 73 and 74 of the Punjab Goods and Services Tax Act, 2017, the Haryana Goods and Services Tax Act, 2017 and the Central Goods and Services Tax Act, 2017, in respect of credits avail in the erstwhile Haryana Value Added Tax (VAT) Act, cannot be adjudicated. It goes without saying that the liberty extended to the Revenue in para 23 of the judgment in Usha Martin Limited (supra) would remain protected in accordance with law.
6. These petitions are accordingly disposed of
7. Pending application(s), if any, stand(s) disposed of.