Refund of Pre-GST (VAT Regime) Taxes Ordered Under Transitional Provisions

 Refund of Pre-GST (VAT Regime) Taxes Ordered Under Transitional Provisions

Issue: Can a taxpayer claim a refund of taxes collected during the pre-GST (VAT) regime that were not refunded under the old system, even after the transition to GST?

Facts:

• The assessee had a pending refund claim from the VAT regime.
• Part of this amount was adjusted against the assessee’s VAT liabilities, but the remaining amount was still with the tax department.
• After the transition to GST, the assessee sought a refund of this remaining amount.

Decision:

• The court acknowledged that under the GST regime, there is no specific mechanism for refunding taxes collected under the previous VAT regime.
• However, considering the transitional provisions and the fact that the amount was rightfully due to the assessee, the court ordered the tax department to refund the remaining amount along with applicable interest.
• The court also directed that the refund should be processed within 12 weeks.

Key Takeaways:

• This case highlights the importance of transitional provisions in ensuring a smooth shift between tax regimes and addressing any pending dues from the previous system.
• Even though the GST law does not explicitly provide for refunds of pre-GST taxes, the court recognized the taxpayer’s right to claim such refunds based on the principles of fairness and equity.
• This decision provides a precedent for taxpayers seeking refunds of taxes collected under the previous VAT regime that remain unpaid after the transition to GST.