Section 140 deals with the carry forward of eligible Input Tax Credit (ITC) from the pre-GST regime into GST. It allowed taxpayers to transfer certain credits available under earlier laws such as VAT, Service Tax, and Excise Duty into their GST electronic credit ledger, subject to prescribed conditions.

The section was introduced to ensure that taxpayers did not lose legitimate tax credits merely because of the shift to GST. Various categories of taxpayers, including manufacturers, service providers, traders, and persons not previously registered, were given transitional credit benefits based on eligibility criteria.

To claim such credits, taxpayers were generally required to file prescribed forms and maintain supporting records. Over the years, Section 140 has been the subject of extensive litigation due to disputes relating to eligibility, procedural requirements, and filing of transitional forms.

The objective of the section was to prevent double taxation and facilitate a smooth transition to the GST regime by preserving accumulated credits earned under the previous indirect tax system.

Example:
A manufacturer having eligible excise duty credit before GST implementation could transfer that credit into GST and use it for payment of future GST liabilities.

Key Point:
Section 140 allowed eligible pre-GST tax credits to be carried forward into GST.

In One Line:
Eligible credits from the old tax regime could be transitioned into GST through Section 140.