VAT Credit on Truck Put to Use After GST Rollout Allowed via TRAN‑1: GSTAT Thiruvananthapuram

The GST Appellate Tribunal’s Thiruvananthapuram Bench partly allowed a scrap dealer’s appeal, granting Kerala VAT credit on a pre-GST truck purchase despite no Form 25 sanction, but denying an unsupported carried-forward balance.

The GST Appellate Tribunal, Thiruvananthapuram, has held that a dealer who bought a truck chassis under Kerala VAT but could put it to use only after 1 Jul 2017 is entitled to carry the VAT credit into GST through TRAN‑1 under Section 140, even though no Form 25 application was filed under the KVAT regime. The Bench of Subramanya Rayaprol, Vice-President, who wrote the order, and Ramamoorthi Sriram, Member (Technical), partly allowed the appeals [Devasurya Traders v. Commissioner of Kerala State GST, 2026-juristway.com-3206-GSTAT(Thiruvananthapuram)-GST].

The appellant, a waste paper and scrap dealer, bought a truck chassis with engine on 2 Jun 2017 and claimed ₹1,75,916.79 of VAT paid on it, along with a KVAT balance of ₹84,500, as transitional credit. Both claims were rejected, and the Joint Commissioner (Appeals) upheld the rejection on 27 Jun 2024.

The Department argued that Section 11(2) of the KVAT Act and Rule 13(1B) of the KVAT Rules made capital goods credit on goods above ₹5 lakh conditional on an application in Form 25 and sanction in Form 25B, which the appellant never obtained. Section 140(2), it said, carries forward only credit already admissible under the earlier law.

The Bench found that the truck was declared in the June 2017 VAT return and could be used only after body-building work, by which time GST had come in and TRAN‑1 was the only route. Relying on the Kerala High Court’s ruling in PK Joseph Vs Commercial Tax Officer (WP (C) No. 15559 of 2014 (T)) that the 30 days run from commercial use and not from purchase, it held that the missing Form 25B “cannot automatically be equated with absence of substantive entitlement.” The appellant, it said, “has been made a victim of procedure.”

The ₹84,500 claim failed because the June 2017 VAT return showed a nil credit balance, a point the appellant did not contest. The order-in-appeal was set aside to the extent of the truck credit, and the appeals were partly allowed with consequential relief.

2026-juristway.com-3206-GSTAT(Thiruvananthapuram)-GST