Facts of the Case

Haldia Petrochemicals Ltd. preferred an intra-court appeal against the order dated 01.07.2022 passed by the learned Single Bench. The appellant raised various grounds challenging the impugned order, while the Government authorities also advanced their respective contentions.

During consideration of the appeal, the Division Bench found that the controversy could be resolved in light of the subsequent comprehensive directions issued by the Hon’ble Supreme Court in Union of India & Anr. vs FILCO Trade Centre Pvt. Ltd. & Anr. concerning availment of transitional credit through Forms TRAN-1 and TRAN-2.

The Supreme Court had directed the GST Network to reopen the common portal for filing or revising the relevant transitional credit forms and had extended that opportunity to aggrieved registered assessees irrespective of whether they had earlier filed writ petitions before High Courts or whether their cases had been decided by the Information Technology Grievance Redressal Committee (ITGRC).

The Division Bench accordingly examined whether the appellant could revise its TRAN-1 and TRAN-2 returns and whether observations contained in the earlier Single Bench order could continue to operate against the appellant.

Issues Involved

The principal issues before the Court were:

  1. Whether the appellant was entitled to file or revise Forms TRAN-1 and TRAN-2 for claiming transitional credit in view of the subsequent directions issued by the Hon’ble Supreme Court in the FILCO case.
  2. Whether the observations made by the learned Single Bench in the order dated 01.07.2022 could operate as an impediment to the appellant in availing the benefit made available under the Supreme Court’s directions.
  3. Whether the departmental authorities were entitled to verify the correctness and genuineness of the transitional credit claimed by the appellant after filing or revision of the relevant forms.
  4. Whether earlier directions or restrictive observations of High Courts could survive after the comprehensive directions issued by the Hon’ble Supreme Court governing TRAN-1 and TRAN-2 claims.

Petitioner/Appellant’s Arguments

The appellant contended that it should be permitted to avail the benefit of the Supreme Court’s directions concerning transitional credit and should be allowed to revise the relevant TRAN-1 and TRAN-2 returns.

A specific concern was raised on behalf of the appellant that certain observations made by the learned Single Bench in the impugned order could create an obstacle in availing the appropriate benefit under the subsequent Supreme Court directions.

The appellant therefore sought effective relief so that the earlier observations would not prejudice its right to file or revise the relevant transitional credit forms in accordance with the framework laid down by the Supreme Court.

Respondent’s Arguments

The judgment records that various contentions were advanced by the learned Government Counsel on behalf of the respondents. However, the Division Bench held that it was unnecessary to undertake an elaborate examination of those rival contentions because the matter stood governed by the comprehensive directions subsequently issued by the Hon’ble Supreme Court in Union of India & Anr. vs FILCO Trade Centre Pvt. Ltd. & Anr.

Accordingly, rather than independently adjudicating every contention raised by the parties, the Court applied the binding Supreme Court framework to the appellant’s transitional credit claim.

Court’s Findings / Order

The Division Bench disposed of the appeal by applying the Supreme Court’s directions in the FILCO Trade Centre case.

The Court held that:

  1. The appellant was entitled to revise its TRAN-1 and TRAN-2 returns in light of the directions issued by the Hon’ble Supreme Court.
  2. The respondents/department were entitled to verify the claim made by the appellant.
  3. The appellant’s apprehension regarding adverse observations in the learned Single Bench order was held to be unfounded because the subsequent Supreme Court order governed the field.
  4. The Division Bench expressly observed that the Supreme Court’s order superseded all earlier directions issued by various High Courts on the subject.
  5. Consequently, the observations made by the learned Single Bench in the impugned order were vacated in their entirety.
  6. The appeal and connected application, I.A. No. CAN 2 of 2022, were disposed of in terms of the Supreme Court’s order.
  7. Liberty was granted to the appellant to file an appropriate revised return in accordance with the Supreme Court directions.

Thus, the Court ensured that earlier adverse observations would not prevent the appellant from pursuing its transitional credit claim under the uniform mechanism laid down by the Supreme Court.

Important Clarification

The most significant clarification arising from the judgment is that the right to file or revise TRAN-1 and TRAN-2 pursuant to the Supreme Court’s FILCO directions was not to be defeated by earlier observations made in individual High Court proceedings.

The Calcutta High Court specifically clarified that:

  • the Supreme Court’s directions had overriding effect over earlier directions issued by various High Courts;
  • the observations of the learned Single Bench that could potentially obstruct the appellant’s claim stood vacated in entirety;
  • the appellant could file the appropriate revised return;
  • the department retained the authority to verify the veracity of the transitional credit claim on merits; and
  • the opportunity to file or revise the form did not automatically amount to final acceptance of the credit claimed, because departmental verification remained part of the process.

This distinction is important: reopening or revision of TRAN-1/TRAN-2 provides an opportunity to claim transitional credit, while admissibility of the claimed credit remains subject to verification and an appropriate order on merits.

Sections / Provisions Involved

·         Section 140 of the CGST Act, 2017 – Transitional Arrangements for Input Tax Credit

·         Corresponding Provision under the West Bengal GST Act, 2017

·         Forms GST TRAN-1 and TRAN-2

·         Procedural Framework for Verification of Transitional Credit

Link to download the order -
https://www.mytaxexpert.co.in/uploads/1783328364_1158compressed.pdf

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