Introduction:
Whether the credit accumulated in the last returns filed under the previous regime can be taken to electronic credit ledger in terms of section 140 of the CT Act [1] by filing TRAN-01 even after the time limit prescribed under Rule 117 of the CT Rules [2] has been subjected to vexatious litigation and has caught the Nation’s attention with contrary decisions of various High Courts and the retrospective amendments to Section 140. The matter has finally landed before the Honourable Supreme Court [3]. Read our extensive analysis on the above matter at The Vires, Right & Retrospectivity - Transitional Credit
On the other hand, another issue related to credit of previous regime which is annoying the exporters is whether they are entitled to claim refund of the credit of the erstwhile regime that was carried forward into electronic credit ledger by filing TRAN-01 i.e. TRAN credit.
CBIC [4] vide their Circular No. 125/44/2019-GST dated 18.11.2019[5] clarified that the TRAN credit is not of the nature of accumulated credit under the GST laws and the same cannot be claimed as a refund against exports undertaken under LUT [6] without payment of IT [7].
In this backdrop an attempt is made in this article to examine the legal validity of the said clarification given by the circular and whether such clarification will also hold good even in case where refund claim was filed in cases where exports are undertaken with payment of tax.