Section 140 of the CGST Act, 2017 – Transitional Credit ––- The petitioner challenged SCN and consequent order rejecting the transition of the ITC. The counsel for the petitioner submitted that the petitioner is well aware of the wrongful claim but has been pushed to the corner since its claim for credit had admittedly been kept pending from 2017. He placed its reliance upon the judgment in the matter of Magma Fincorp Ltd. Vs. State of Telangana and Others. The court observed that the provisions of Section 142(5) provide for the payment and recovery of tax, penalty etc. and cast a mandate upon the Commercial Taxes Department to refund any excess determined within a period of 90 days from date of order of assessment/revision/appellate order. The filing of a TRAN 1 is clearly misconceived, the petitioner is protected by the intention to protect its claim for refund in the face of the unjustified, and admitted delay on the part of the respondents. In the present case, the question evasion of tax does not arise since it is not an assessment but only determination of the correctness of availment of ITC.

Held that:- The Hon’ble High Court set aside the order and directed that the refund claim dated 19.07.2017 be processed on merits and paid over to the petitioner with interest till 27.12.2017, being the date when the TRAN 1 application was filed by the petitioner, within a period of four weeks. As the TRAN-1 filed by the petitioner, is admittedly incorrect in law, it does not hold any force, and the question of availment of credit does not arise.