Section 140 – Transitional Arrangements for Input Tax Credit

Section 140 of the Central Goods and Services Tax Act, 2017 deals with the transitional arrangements for input tax credit when the GST regime replaced the earlier indirect tax system from 1 July 2017.

The provision was introduced to provide a legal mechanism for carrying eligible credits from the pre-GST regime into the GST electronic credit ledger. The earlier tax systems included Central Excise, Service Tax and State VAT-related regimes, depending on the nature of the taxpayer and the credit involved.

Section 140 is therefore an important transitional provision because GST did not begin with a completely empty input tax credit position. Businesses had already accumulated CENVAT credit, VAT credit and other eligible credits under the earlier laws. Section 140 established how specified credits could move into the GST regime, subject to statutory conditions.

The section contains provisions dealing with:

• CENVAT credit carried forward from the earlier regime;
• unavailed credit on capital goods;
• eligible duties on inputs held in stock;
• manufacturers and suppliers dealing with taxable and exempt supplies;
• inputs and input services received around the date of transition;
• persons who were paying tax under fixed-rate or similar schemes;
• Input Service Distributors;
• centrally registered taxpayers; and
• credit that had been reversed under the earlier law because consideration for input services had not been paid within the prescribed period.

The GST Council and CBIC have also issued transitional provisions, rules and clarifications concerning Section 140. In particular, Rule 117 provided the mechanism for declaring transitional credit through FORM GST TRAN-1, while FORM GST TRAN-2 was relevant to specified stock-credit situations.

What Is Section 140 of the CGST Act?

Section 140 is contained in Chapter XX – Transitional Provisions of the CGST Act.

Its purpose was to ensure that eligible credits arising under the earlier indirect tax regime were not simply lost when GST came into force.

The basic concept can be understood as:

Pre-GST eligible credit → Transitional mechanism → GST electronic credit ledger

However, Section 140 did not provide an unrestricted transfer of every amount appearing as credit under the previous laws. Each category of credit was subject to its own conditions and limitations.

For example, Section 140(1) deals with eligible CENVAT credit carried forward in the last return under the existing law, while Section 140(3) deals with specified stock-related credits.

Why Was Section 140 Necessary?

GST replaced several indirect taxes with a unified GST framework from 1 July 2017.

Before GST, businesses could have credits under different laws, such as:

• Central Excise;
• Service Tax;
• State VAT;
• Entry Tax in applicable circumstances; and
• other eligible taxes or duties under the previous framework.

If these accumulated credits were simply ignored on 1 July 2017, taxpayers could face a significant break in the credit chain.

Section 140 was therefore designed to facilitate the transition from the old credit system to the GST credit system.

The transitional provisions were intended to address credits that had already arisen under the previous tax laws and were eligible to be carried forward into GST.

Meaning of “Appointed Day”

For Section 140, the important transition date is the appointed day, which was 1 July 2017 for Section 140.

This date separates the earlier indirect tax regime from the GST regime for the purpose of the transitional provisions.

Therefore, Section 140 repeatedly refers to:

• the period ending immediately before the appointed day;
• inputs held on the appointed day;
• supplies received before or after the appointed day; and
• taxes or duties paid under the existing law.

In practical terms, the relevant transition point was 30 June 2017 / 1 July 2017.

Section 140(1) – CENVAT Credit Carried Forward

Section 140(1) deals with CENVAT credit carried forward in the return relating to the period immediately preceding the appointed day.

A registered person, other than a person opting to pay tax under Section 10, was entitled to take eligible CENVAT credit carried forward in the relevant return into the electronic credit ledger, subject to the conditions prescribed under the law.

The provision therefore primarily addressed credit that already appeared as eligible carried-forward CENVAT credit under the earlier regime.

Conditions Under Section 140(1)

The provision contains important restrictions.

The registered person was not entitled to take the credit where:

1. the credit was not admissible as input tax credit under the CGST Act;
2. the required returns under the existing law for the preceding six months had not been furnished; or
3. the credit related to goods manufactured and cleared under specified exemption notifications.

These conditions were designed to prevent ineligible or unsupported credits from entering the GST credit system.

Section 140(1) and “Eligible Duties”

Section 140 was subsequently amended to clarify the scope of eligible duties and taxes that could be transitioned.

The current statutory text contains the expression “CENVAT credit of eligible duties” in Section 140(1).

The amendments relating to eligible duties and the explanations were given retrospective effect from 1 July 2017.

This is important because Section 140 does not permit every form of historical levy or cess to be automatically treated as transitional credit.

Section 140(2) – Unavailed CENVAT Credit on Capital Goods

Section 140(2) deals with unavailed CENVAT credit in respect of capital goods.

Under the earlier tax regime, a taxpayer could have been entitled to credit on capital goods but may not have availed the entire credit before GST came into force.

Section 140(2) provided a mechanism for the eligible unavailed portion to be carried into the GST electronic credit ledger, subject to the statutory requirements.

This was important because capital goods were often subject to credit restrictions under the earlier CENVAT framework.

Example

Suppose a business purchased eligible capital goods before 1 July 2017.

The business had already availed part of the eligible CENVAT credit under the existing law, but a portion remained unavailed on 30 June 2017.

Subject to the conditions of Section 140(2), the eligible unavailed portion could be transitioned into the GST credit system.

Section 140(3) – Credit on Inputs Held in Stock

Section 140(3) deals with specified registered persons who were not registered under the existing law or were dealing with certain exempted, tax-free or first-point-taxed goods under the earlier regime but whose supplies became taxable under GST.

The provision allows eligible duties in respect of specified inputs held in stock, including inputs contained in semi-finished or finished goods, to be taken as credit subject to the statutory conditions.

This provision was particularly relevant for businesses that entered GST with stock on which eligible taxes or duties had already been paid under the previous regime.

Who Could Use Section 140(3)?

The provision covered specified categories such as persons who:

• were not liable to registration under the existing law;
• were engaged in the sale of exempted goods or tax-free goods;
• dealt with goods that had suffered tax at the first point of sale under the previous State law; or
• were otherwise entitled to specified input tax credit under the previous framework.

However, the credit was subject to the conditions prescribed by Section 140 and the rules.

It was not an automatic credit for every item of stock held on 1 July 2017.

Conditions for Stock Credit

The transitional stock-credit mechanism generally required conditions relating to:

• use or intended use of the inputs for taxable supplies;
• eligibility for ITC under GST;
• possession of prescribed documents evidencing payment of duty;
• age of the relevant invoices or documents; and
• other conditions prescribed by the rules.

The transitional rules also provided a special mechanism for specified taxpayers who did not possess duty-paying documents.

Deemed Credit Where Duty-Paying Documents Were Not Available

A significant historical feature of the transitional provisions was the mechanism for specified taxpayers who did not possess documents evidencing payment of central excise duty on stock.

Under the prescribed transitional rules, eligible taxpayers could, subject to the applicable conditions and safeguards, receive credit at specified rates.

CBIC’s transitional FAQ explains that under Rule 117(4), specified taxpayers without duty-paying documents could receive deemed credit at prescribed rates, subject to the conditions and time limitations applicable at the time.

This mechanism was intended to address practical difficulties faced by traders and other businesses that possessed stock but did not have complete central-excise duty documents.

Section 140(4) – Taxable and Exempt Supplies

Section 140(4) addresses persons who were engaged in manufacturing taxable as well as exempt goods or providing taxable as well as exempt services under the earlier laws, where those supplies became liable to GST.

The provision allows specified transitional credits relating to:

• CENVAT credit carried forward under the existing law; and
• eligible duties on inputs held in stock or contained in semi-finished or finished goods.

The provision therefore recognises that a business could have had both taxable and exempt activities before GST and still require a mechanism to transition eligible credit when the GST regime commenced.

Example of Section 140(4)

Suppose a manufacturer produced:

• Product A, which was taxable under the earlier regime; and
• Product B, which was exempt.

On 30 June 2017, the manufacturer had eligible CENVAT credit carried forward and also held inputs used in manufacturing.

If those supplies became taxable under GST and the statutory conditions were satisfied, Section 140(4) provided the mechanism for transitioning the specified eligible credits into GST.

Section 140(5) – Inputs and Input Services Received Around the Transition Date

Section 140(5) deals with eligible duties and taxes relating to inputs or input services received on or after the appointed day, where the relevant duty or tax had been paid by the supplier under the existing law.

The provision was intended to address supplies that straddled the transition from the old regime to GST.

For example, an input service could relate to the pre-GST period but the invoice or receipt could occur around the transition date.

Section 140(5) provided a mechanism for specified eligible credit to be taken into the GST electronic credit ledger, subject to the statutory requirements.

Recording of Documents Under Section 140(5)

One of the original statutory conditions required the relevant invoice or tax-paying document to be recorded in the books within the specified period from the appointed day.

The original provision also allowed extension of that period by the Commissioner for sufficient cause, subject to the statutory limit.

The taxpayer was additionally required to furnish the prescribed statement relating to the credit taken under this subsection.

Section 140(6) – Persons Paying Tax at a Fixed Rate

Section 140(6) dealt with registered persons who were paying tax at a fixed rate or a fixed amount in lieu of the tax payable under the existing law.

Such persons could transition eligible duties relating to specified inputs held in stock and inputs contained in semi-finished or finished goods on the appointed day, subject to the statutory conditions.

Among the conditions were requirements that:

• the inputs or goods were used or intended to be used for taxable supplies under GST;
• the person was not paying tax under Section 10;
• the person was eligible for ITC under GST;
• prescribed documents evidencing payment of duty were available; and
• the documents satisfied the applicable time condition.

Section 140(7) – Input Service Distributor

Section 140(7) deals with Input Service Distributors (ISDs).

This provision became particularly significant because certain services received before the appointed day could have invoices issued or received around the transition date.

The current provision provides that input tax credit relating to services received prior to the appointed day by an Input Service Distributor can be eligible for distribution under GST within such time and in such manner as may be prescribed, whether the invoices relating to those services were received before, on or after the appointed day.

This wording was introduced through a retrospective amendment with effect from 1 July 2017.

2024 Amendment to Section 140(7)

The 2024 amendment to Section 140(7) is particularly important when discussing the current statutory text.

The GST Council considered the issue after judicial proceedings concerning transitional credit for ISDs where the services had been received before the appointed day and invoices had also been received before the appointed day.

The Council recommended an amendment to clarify eligibility for such transitional credit.

The Finance (No. 2) Act, 2024 subsequently amended Section 140(7) with retrospective effect from 1 July 2017. The amended provision covers eligible credit for services received before the appointed day irrespective of whether the invoices were received before, on or after the appointed day, subject to the statutory and prescribed requirements.

Why the Section 140(7) Amendment Matters

The amendment is important because transitional provisions can involve transactions where:

• the service was received before GST;
• the invoice was received before GST;
• the invoice was received after GST; or
• the credit was required to be distributed through an ISD mechanism.

The 2024 amendment was intended to clarify the statutory availability of eligible transitional credit for the specified ISD circumstances.

The GST Council specifically recorded that the amendment was intended to enable transitional credit for eligible CENVAT credit relating to input services received by an ISD before the appointed day, including cases where the invoice had also been received before the appointed date.

Section 140(8) – Centrally Registered Persons

Section 140(8) addresses a person who had centralised registration under the existing law and subsequently obtained registration under GST.

The provision allows such a person to take eligible CENVAT credit carried forward in the relevant return into the GST electronic credit ledger, subject to the prescribed requirements.

It also contains provisions allowing the credit to be transferred to registered persons having the same PAN for which the centralised registration was obtained under the existing law.

This was particularly relevant for businesses that previously operated through centralised registrations but had multiple GST registrations after the introduction of GST.

Example of Section 140(8)

Suppose a company had centralised registration under the earlier service-tax regime.

After GST implementation, the company obtained separate GST registrations in multiple States.

If eligible CENVAT credit remained under the earlier centralised registration, Section 140(8) provided the transitional framework for carrying the credit into GST and transferring it to eligible registrations having the same PAN, subject to the statutory conditions.

Section 140(9) – Reclaim of Reversed Credit

Section 140(9) addresses a specific situation involving input services.

Under the earlier CENVAT regime, credit could be reversed where consideration for an input service was not paid within the prescribed period.

Section 140(9) provided a mechanism for reclaiming such credit under specified circumstances where the consideration was subsequently paid within the prescribed period after the appointed day.

The GST Council’s historical discussion of FORM GST TRAN-1 specifically recognised Section 140(9) and its relevance to CGST credit carried into the electronic credit ledger.

Explanation 1 – Eligible Duties

Section 140 contains explanations defining the duties and taxes that can be considered eligible for specified transitional-credit provisions.

Explanation 1 relates to eligible duties for specified stock-related transitional credit provisions.

The listed duties include specified:

• additional duties of excise;
• additional customs duties;
• excise duties;
• National Calamity Contingent Duty; and
• other duties identified in the statutory explanation.

The provision has undergone retrospective amendments since the original enactment.

Explanation 2 – Eligible Duties and Taxes

Explanation 2 relates to eligible duties and taxes for Section 140(5).

It includes specified duties and Service Tax under Section 66B of the Finance Act, 1994, in respect of inputs and input services received on or after the appointed day, subject to the statutory framework.

This distinction between Explanation 1 and Explanation 2 is important because they apply to different subsections of Section 140.

👉 Read More → Section 142 – Miscellaneous transitional provisions

Explanation 3 – Exclusion of Certain Cesses

Explanation 3 was inserted retrospectively to clarify the meaning of eligible duties and taxes.

It provides that the expression “eligible duties and taxes” excludes:

• any cess that has not been specified in Explanation 1 or Explanation 2; and
• any cess collected as additional duty of customs under Section 3(1) of the Customs Tariff Act, 1975.

The amendment was made with retrospective effect from 1 July 2017.

This clarification is significant because taxpayers had raised questions regarding whether various cesses from the pre-GST regime could be transitioned into GST.

Section 140 and FORM GST TRAN-1

Section 140 provided the substantive legal entitlement for specified transitional credits, while the GST Rules prescribed the procedural mechanism.

Rule 117 provided for filing FORM GST TRAN-1 electronically to declare transitional credit.

The original transitional rules required eligible registered persons to submit the declaration within the prescribed period, subject to extensions permitted under the rules.

FORM GST TRAN-1 contained different tables corresponding to different categories of transitional credit.

For example, the GST Council’s historical documentation shows that TRAN-1 included separate reporting mechanisms for carried-forward credit, stock-related credit and other Section 140 claims.

Section 140 and FORM GST TRAN-2

FORM GST TRAN-2 was relevant to specified stock-credit claims, particularly the deemed-credit mechanism where eligible taxpayers did not possess prescribed duty-paying documents.

The form and transitional rules provided the procedural mechanism for declaring such credits.

The Supreme Court’s 2022 directions concerning transitional credit specifically referred to TRAN-1 and TRAN-2.

Supreme Court and Transitional Credit – Filco Case

Section 140 became the subject of extensive litigation concerning the time available to taxpayers to file or revise transitional credit declarations.

In Union of India v. Filco Trade Centre Pvt. Ltd., the Supreme Court issued directions in July 2022 requiring GSTN to open the common portal for filing the relevant TRAN-1 and TRAN-2 forms for two months.

The Supreme Court also directed that eligible aggrieved registered taxpayers could file the relevant forms or revise already filed forms, and that the claims would be verified by the concerned officers.

The GST Council subsequently recorded the directions and the related administrative mechanism in its official material.

CBIC Circular No. 180/12/2022-GST dated 9 September 2022 provided guidelines for filing or revising TRAN-1 and TRAN-2 pursuant to the Supreme Court’s directions. Circular No. 182/14/2022-GST subsequently provided guidelines for verification of transitional-credit claims.

Important Point About Transitional Credit Today

Section 140 is a historical transitional provision connected with the introduction of GST in 2017.

It should not be confused with the normal ongoing ITC provisions under Section 16.

Section 16 deals with regular input tax credit on supplies received under the GST regime.

Section 140, by contrast, deals with specified credit arising from the pre-GST regime and the transition into GST.

Therefore:

Section 16 → Regular GST input tax credit

Section 140 → Transitional credit from the pre-GST regime

Is Section 140 Still Relevant?

Yes, Section 140 remains important for understanding the legal basis of transitional credit and for historical or continuing litigation concerning transitional claims.

However, taxpayers should not assume that Section 140 creates a general new opportunity in 2026 to file fresh transitional-credit claims outside the procedures and judicial directions that governed the original transition.

The Supreme Court’s special portal-opening mechanism in 2022 was itself a specific judicial direction, and the GST Council recorded the subsequent verification procedure.

Accordingly, a taxpayer dealing with an unresolved transitional-credit dispute should examine the specific claim, filing history, relevant court or departmental order and applicable procedural directions rather than treating Section 140 as an ordinary current ITC provision.

Section 140 vs Section 16

Basis	Section 140	Section 16
Main purpose	Transitional credit	Regular GST ITC
Period concerned	Pre-GST transition	GST regime
Main tax concept	CENVAT/eligible pre-GST duties and taxes	GST input tax
Transition date	1 July 2017	Ongoing GST framework
Main mechanism	Transitional provisions and TRAN forms	GST returns and electronic credit ledger
Nature	Transitional/historical	Regular ITC provision

This distinction is essential for understanding GST input tax credit.

Section 140 vs Section 142

Section 140 deals primarily with transitional input tax credit.

Section 142 contains various miscellaneous transitional provisions dealing with matters such as:

• goods returned after the appointed day;
• price revisions;
• pending refunds;
• pending assessments;
• existing-law proceedings;
• contracts entered into before GST; and
• other transitional matters.

Therefore, Section 140 and Section 142 should not be treated as interchangeable.

Section 140 vs Section 141

Section 141 deals with transitional provisions relating to job work.

It addresses goods or inputs that were sent to job workers under the existing law before the appointed day and were returned or otherwise dealt with after GST began.

Section 140, on the other hand, primarily concerns transitional input tax credit.

Practical Example – CENVAT Balance

Suppose a manufacturer had ₹10 lakh of eligible CENVAT credit carried forward in the last return under the pre-GST regime.

If the taxpayer satisfied the statutory conditions for Section 140(1), the eligible amount could be transitioned into the GST electronic credit ledger through the prescribed transitional mechanism.

The taxpayer could not, however, transition any amount that was not admissible as ITC under GST or that was otherwise excluded by Section 140.

Practical Example – Capital Goods

Suppose a company purchased eligible capital goods before 1 July 2017.

It had not availed the complete eligible CENVAT credit under the previous regime.

Section 140(2) provided the mechanism for transitioning the unavailed portion, subject to the statutory requirements.

The amount was therefore not simply treated as a fresh GST credit under Section 16. It arose from the transitional mechanism under Section 140.

Practical Example – Stock Without Duty Documents

Suppose a trader held eligible taxable stock on 1 July 2017 but did not possess the prescribed central-excise duty-paying documents.

For specified taxpayers, the transitional rules provided a deemed-credit mechanism subject to conditions, rates, safeguards and the applicable time period.

This historical mechanism was connected with Section 140(3) and Rule 117.

Practical Example – Input Service Received Before GST

Suppose an ISD received an eligible input service before 1 July 2017.

The related invoice circumstances fall within the special transitional framework.

The current amended Section 140(7) specifically addresses eligible transitional credit for services received before the appointed day and states that the invoices may have been received before, on or after the appointed day, subject to the prescribed requirements.

Importance of Documentary Evidence

Transitional credit was based on historical transactions and historical tax payments.

Therefore, documents were particularly important.

Depending on the category of claim, relevant evidence could include:

• pre-GST returns;
• CENVAT registers;
• VAT returns;
• invoices;
• duty-paying documents;
• service-tax documents;
• stock records;
• capital-goods records;
• ISD records;
• accounting entries;
• FORM GST TRAN-1;
• FORM GST TRAN-2; and
• supporting reconciliation statements.

Where transitional-credit claims are being examined today, the taxpayer should maintain the documentation necessary to establish the eligibility and amount of the claim.

Key Conditions to Consider Under Section 140

Although each subsection has its own requirements, the following principles are important:

Eligibility Under GST

The credit must satisfy the applicable GST eligibility requirements.

Pre-GST Origin

The credit must fall within the transitional category specified in the relevant subsection.

Proper Documentation

The taxpayer must satisfy the applicable documentation requirements.

Correct Reporting

The claim had to be reported through the prescribed transitional mechanism.

Time Requirements

The prescribed time limits and subsequent judicial or administrative directions are important.

No Automatic Credit

Not every amount appearing under the old tax regime could be transferred into GST.

Important Amendments to Section 140

Section 140 has undergone several retrospective amendments since GST was introduced.

Important changes include:

• clarification of eligible duties;
• changes concerning the explanations to Section 140;
• insertion of Explanation 3 concerning cesses;
• changes introduced through the Finance Act, 2020; and
• the 2024 retrospective amendment to Section 140(7) concerning ISD transitional credit.

Because many of these changes operate retrospectively from 1 July 2017, the current statutory wording should be considered when analysing historical transitional-credit disputes.

Common Mistakes in Understanding Section 140

Mistake 1: Treating Section 140 as Regular ITC

Section 140 is not the normal ITC provision.

Mistake 2: Assuming Every Pre-GST Credit Was Transferable

Only eligible credits falling within the relevant subsection could be transitioned.

Mistake 3: Ignoring the Documentation Requirement

Historical tax credits generally required supporting records and prescribed documentation.

Mistake 4: Ignoring Transitional Forms

FORM GST TRAN-1 and, where applicable, TRAN-2 were important procedural mechanisms.

Mistake 5: Ignoring Judicial Developments

Transitional credit became subject to significant litigation, including the Supreme Court’s directions in the Filco case.

Mistake 6: Treating the 2024 Amendment as a New General ITC Benefit

The 2024 Section 140(7) amendment specifically addressed the statutory treatment of eligible ISD transitional credit. It should not be interpreted as a general extension of normal GST ITC.

Key Takeaways of Section 140

Section 140 can be summarised through the following points:

1. Section 140 deals with transitional arrangements for input tax credit.
2. It was introduced when GST replaced the earlier indirect tax regime.
3. The appointed day for GST transition was 1 July 2017.
4. Section 140 provides different mechanisms for different categories of pre-GST credit.
5. Section 140(1) deals with eligible CENVAT credit carried forward from the earlier regime.
6. Section 140(2) deals with specified unavailed CENVAT credit on capital goods.
7. Section 140(3) deals with specified credit relating to inputs and stock.
8. Section 140(4) deals with businesses having taxable and exempt activities under the earlier regime.
9. Section 140(5) deals with specified inputs and input services received around the transition date.
10. Section 140(6) deals with persons who were paying tax at a fixed rate or fixed amount under the earlier law.
11. Section 140(7) deals with transitional credit relating to services received by Input Service Distributors.
12. Section 140(8) deals with persons having centralised registration under the earlier law.
13. Section 140(9) deals with specified credit reversed under the earlier law for non-payment of consideration and its subsequent reclaim.
14. Section 140 contains explanations defining eligible duties and eligible duties and taxes.
15. Explanation 3 excludes unspecified cesses from the expression “eligible duties and taxes.”
16. Rule 117 provided the procedural mechanism for transitional-credit declarations through FORM GST TRAN-1.
17. FORM GST TRAN-2 was relevant to specified stock-credit situations.
18. Transitional credit became the subject of significant litigation concerning filing and technical difficulties.
19. In 2022, the Supreme Court directed GSTN to open the portal for filing or revising TRAN-1 and TRAN-2 for the period specified in its orders.
20. CBIC Circulars 180/12/2022-GST and 182/14/2022-GST provided guidelines concerning filing/revising and verification of transitional-credit claims.
21. The 2024 amendment to Section 140(7) retrospectively clarified the transitional-credit position for specified ISD services and invoice timing.
22. Section 140 should be distinguished from Section 16, which deals with regular GST input tax credit.
23. Section 140 should also be distinguished from Sections 141 and 142, which deal with other transitional matters.

👉 Read More → Section 140 – Transitional arrangements for input tax credit

Conclusion

Section 140 of the CGST Act is the principal statutory provision dealing with the transition of eligible input tax credit from the pre-GST regime into the GST system.

When GST was introduced on 1 July 2017, businesses already had credits arising under earlier laws such as Central Excise, Service Tax and State VAT-related provisions. Section 140 provided different transitional mechanisms so that specified eligible credits could be carried into the GST electronic credit ledger rather than being automatically lost at the time of transition.

The provision is divided into several subsections because different taxpayers had different types of pre-GST credits. Section 140(1) addresses carried-forward CENVAT credit, Section 140(2) deals with unavailed capital-goods credit, Section 140(3) covers specified stock-related credit, while other subsections address taxable and exempt supplies, transition-period invoices, fixed-rate taxpayers, Input Service Distributors, centrally registered persons and specified reversed credit.

The procedural side of the transitional-credit mechanism was supported by Rule 117 and the prescribed TRAN forms. Transitional credit also became the subject of extensive litigation concerning technical difficulties and filing limitations. The Supreme Court’s directions in the Filco case led to a special reopening of the GST portal for TRAN-1 and TRAN-2 filing or revision in 2022, followed by departmental verification procedures.

The later amendments to Section 140 are also important. In particular, the 2024 amendment to Section 140(7), with retrospective effect from 1 July 2017, addressed transitional credit for eligible services received by an Input Service Distributor before the appointed day and clarified the position regarding the timing of receipt of invoices.

Section 140 should therefore be understood primarily as a transitional bridge between the old indirect tax credit system and GST, rather than as a normal current-day ITC provision. For regular GST input tax credit, taxpayers generally look to the ongoing provisions such as Section 16 and the corresponding rules. Section 140 remains particularly relevant when examining historical transitional-credit claims, departmental verification, litigation, retrospective amendments and unresolved disputes relating to the GST transition.

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