The Hon’ble Gujarat High Court in Dilip Babubhai Patel v. State of Gujarat & Anr. [R/Special Civil Application No. 21685 of 2019 dated June 29, 2026] upheld the Department’s rejection of refund of transitional SGST credit carried forward under Section 140 of the CGST Act, 2017 and the Gujarat GST Act, 2017 (“the GST Acts”) and held that once the accumulated credit of the erstwhile regime is carried forward and transitioned into the GST framework, the statutory bar under the second proviso to Section 142(3) of the GST Acts gets triggered, making refund of such credit impermissible. Mere transfer of credit through Form GST TRAN-1 will not ipso facto make the credit worthy of refund under Section 54(3) of the GST Acts. However, the Court partly allowed the writ petition by holding that the Assessee is entitled to re-credit of the said amount to its Electronic Credit Ledger (“ECL”) for utilization and directed the Revenue to pass an appropriate order for re-crediting under Form GST PMT-03 within a period of 12 weeks, if it is found that the ITC is required to be re-credited.
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