Input tax credit utilized for GST liabilities cannot be recovered under the repealed Value Added Tax Act.

The petitioner, a registered dealer under the Assam Value Added Tax (AVAT) Act, 2003, filed its final return for June 2017, claiming an Input Tax Credit (ITC) of Rs. 24,81,606.

This claim included taxes charged by Assam Gas Company Ltd. following the settlement of a decade-long dispute.

Upon the introduction of the Assam Goods and Services Tax (AGST) Act, 2017, the petitioner transitioned to the GST regime and carried forward the said ITC to meet its liabilities under the new Act.

On 06-05-2022, the Superintendent of Taxes (Respondent No. 3) issued a notice alleging excess ITC claim and subsequently passed an order on 20-07-2022 under Section 14(9)(d) of the AVAT Act, reversing the ITC and demanding Rs. 47,15,051, including interest.

The petitioner challenged this, arguing that since the ITC was never utilized to satisfy AVAT liabilities, the authorities under the repealed Act lacked jurisdiction to recover it.

1. Whether the authorities under the repealed AVAT Act, 2003, have the jurisdiction to reverse and recover ITC that was claimed in a return but utilized only under the GST regime.

2. Whether the term "availed of" under Section 14(9) of the AVAT Act necessitates actual utilization of credit against tax liability within the AVAT regime to trigger reversal proceedings.

Section 14(1) restricts ITC eligibility to taxable goods excluding those in the Fourth Schedule.

Sections 14(8) and 14(9) stipulate that ITC "already availed of" shall stand reversed in specific circumstances, including cases of excess claims.

The court applied the principle that for a reversal to occur under the AVAT regime, the credit must have been utilized to meet a tax liability arising under that specific Act before its repeal.

Consequently, post-repeal liabilities are governed by the AGST Act, 2017.

The court analyzed the statutory language of Section 14(8) and 14(9) of the AVAT Act, focusing on the phrase "availed of".

It reasoned that "availing" ITC implies the act of utilizing such credit to discharge a tax liability under the 2003 Act.

In this case, the petitioner had merely reflected the ITC in its June 2017 return and carried it forward to the GST regime without using it to offset any AVAT-period dues.

The court found that because the utilization occurred under the AGST Act, 2017, the authorities could not invoke the provisions of the repealed AVAT Act to effect recovery.

The court emphasized that without prior utilization under the 2003 Act, there was no "recoverable demand" that could sustain the imposition of interest under the old regime.

Any challenge to the validity of the ITC utilized after 01-07-2017 must be adjudicated under the AGST Act, 2017.

It held that reversal under Section 14(9) of the AVAT Act is only maintainable if the dealer utilized the excess ITC for liabilities under the same Act.

The Court granted liberty to the competent authorities under the AGST Act, 2017, to institute fresh proceedings for the reversal of the ITC utilized under the GST regime, provided such action is permissible under the 2017 Act.