This article relates to Unutilized balance of VAT Credit (under State VAT laws) standing on 30.06.2017.
A registered person under existing State laws will be allowed to take ‘State VAT credit’ carried forward in the return (under existing law) relating to the period ending on 30 June 2017 subject to fulfillment of all the following conditions:
- such registered person should not be registered under provisions of Composition Levy in GST
- said amount of credit is admissible as Input tax credit under this act
- he has furnished all the returns required under the existing law for the period of six months immediately preceding the appointed date (i.e.01 July 2017)
- said amount of credit should not be related to goods sold under such exemption notifications as are notified by the State Government.
However, if a dealer has made a claim from State Government for refund of unutilized Credit against sales under following circumstances, he will not be allowed to carry this credit under GST:
- Inter-state sales (Section 3 and Section 6 of CST Act)
- Export of goods out of India (Section 5(3) of CST Act)
- Inter- state stock transfer (Section 6A of CST Act)
- Sale to SEZ developer or SEZ unit (Section 8(8) of CST Act)
In such situation, he will be given refund of such balance by respective state government subject to the condition that such refund claims substantiated in the manner and period specified under CST (Registration and Turnover) Rules, 1956.
However, where such credit not substantiated as per above, he will not be allowed to carry that amount as Input tax credit under GST.
