The Goods and Services Tax Appellate Tribunal (GSTAT), State Bench, Delhi, has directed that an appeal concerning the carry-forward of CENVAT credit and the relevance of Input Service Distributor (ISD) registration be heard by Division Bench II.
The dispute raises questions about whether an entitlement claimed under Section 140(1) of the Central Goods and Services Tax Act, 2017, can be restricted by imposing a registration condition allegedly absent from the provision.
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The order dated October 15, 2026, records four questions of law identified by the parties. These concern the transition of an unutilised CENVAT credit balance, the effect of the respondent’s ISD status under the earlier Service Tax regime, the relationship between Sections 140(1) and 140(7), and the extent to which an executive circular can restrict a statutory entitlement. The tribunal has listed the matter for December 15, 2026.
The first question recorded in the order concerns whether the respondent was entitled, under Section 140(1), to carry forward eligible CENVAT credit lying unutilised and reflected in its last return filed under the erstwhile law.
The associated issue is whether that entitlement could be denied by requiring registration as an ISD under the GST regime when, as framed in the question before the tribunal, Section 140(1) does not prescribe such a condition.
The dispute therefore places the statutory conditions for transitioning credit at the centre of the proceedings. The tribunal has yet to determine whether the respondent satisfies the applicable requirements or whether the disputed registration requirement can lawfully be imposed.
The second question concerns the legal effect of the respondent’s status as an Input Service Distributor under the former Service Tax regime.
The parties have identified for consideration whether that status itself creates a statutory disqualification from transitioning an eligible closing CENVAT credit balance under Section 140(1), in the absence of an express provision providing for such exclusion.
This question is distinct from whether the credit is otherwise eligible. It concerns whether the taxpayer’s registration category under the earlier regime can independently operate as a bar to the transition claimed.
The third question addresses whether Section 140(7) can be invoked to deny or restrict the respondent’s claimed entitlement under Section 140(1).
As framed in the order, Section 140(7) concerns a distinct category of unavailed CENVAT credit relating to input services received by an ISD before the appointed day. The issue is whether that provision affects an independent claim to carry forward a closing CENVAT credit balance under Section 140(1).
The distinction between these categories of credit will form part of the legal examination. The order, however, does not decide how the two provisions interact or which provision governs the respondent’s claim.
The fourth question concerns reliance on Circular No. 182/14/2022-GST, referred to in the order as dated November 10, 2022.
The issue identified is whether the circular can impose a substantive restriction on the respondent’s claimed entitlement under Section 140(1) when the statute does not expressly contemplate that restriction.
The question also raises the broader issue of whether an executive circular can curtail or alter the scope of a statutory right. This remains a question for adjudication; the tribunal has not ruled in the present order that the circular is invalid or inapplicable.
The tribunal stated that the appeal involves questions of law and is required to be heard by Division Bench II in view of Office Order No. 3 GSTAT/Benches/PB/2026/157 issued by the President of GSTAT’s Principal Bench.
Assistant Commissioner Keval Nilesh Mehta appeared on behalf of the appellant, while Advocate Shubham Goel represented the respondent.
The October 15 order is procedural. It neither allows nor rejects the transitional credit claim and contains no final finding on the validity of the disputed conditions. Its significance lies in identifying the legal questions that will be examined when the appeal is heard.
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