Facts of the Case

The petitioner, The Aakash Metals, represented by its Managing Partner, approached the Kerala High Court in connection with the availment of transitional credit while migrating to the Goods and Services Tax regime.

The record indicates that the petitioner had filed Form GST TRAN-1 and had also placed on record materials concerning the filed return, the electronic credit ledger for the period from 1 July 2017 to 30 November 2017, online requests submitted before the assessing authority on 26 November 2019 and 2 December 2019, and a screenshot relating to the grievance.

The dispute essentially concerned the petitioner’s ability to avail transitional credit during migration to GST. When the writ petition came up for consideration, the Kerala High Court recorded that the issue stood completely addressed by the judgment of the Supreme Court in Union of India & Anr. vs Filco Trade Centre Pvt. Ltd. & Anr., 2022 SCC OnLine SC 912.

Accordingly, the High Court examined the petitioner’s case in the light of the directions already issued by the Supreme Court concerning filing or revision of TRAN-1 and TRAN-2 and the processing of transitional credit claims.

Issues Involved

The principal issues arising from the matter were:

  1. Whether the petitioner could obtain an effective opportunity to avail transitional credit during migration to the GST regime through the prescribed transitional forms.
  2. Whether the directions issued by the Supreme Court in Union of India vs Filco Trade Centre Pvt. Ltd. concerning filing and revision of TRAN-1 and TRAN-2 were applicable to the petitioner’s case.
  3. Whether the benefit of the Supreme Court’s directions was available irrespective of whether a taxpayer had earlier filed a writ petition before a High Court or whether the taxpayer’s case had been decided by the Information Technology Grievance Redressal Committee (ITGRC).
  4. Whether the petitioner was also entitled to the benefit of the extension of time subsequently granted by the Supreme Court by its order dated 2 September 2022.

Petitioner’s Arguments

The judgment is brief and does not separately record detailed oral submissions of the petitioner. Therefore, no argument should be attributed to the petitioner beyond what is borne out from the order and case record.

From the nature of the writ petition and the exhibits referred to in the judgment, the petitioner’s grievance concerned the availment of transitional credit while migrating to GST. The petitioner had relied upon documentation including the filed GST TRAN-1, the view of the filed return, the electronic credit ledger, online requests made to the assessing authority, and a screenshot.

The petitioner’s case, in substance, required consideration of its transitional credit claim in accordance with the legal mechanism made available under the Supreme Court’s directions in Filco Trade Centre.

Respondents’ Arguments

The judgment does not separately reproduce detailed arguments advanced by the respondents. It records that there was no dispute before the High Court that the issue raised in the writ petition stood completely addressed by the Supreme Court’s judgment in Union of India vs Filco Trade Centre Pvt. Ltd.

Accordingly, the respondents’ position was not independently analysed through any detailed adversarial findings, as the controversy was governed by the directions of the Supreme Court.

Court Order / Findings

The Kerala High Court found that the issue concerning transitional credit was fully covered by the Supreme Court decision in Union of India & Anr. vs Filco Trade Centre Pvt. Ltd. & Anr., 2022 SCC OnLine SC 912.

The High Court specifically took note of the Supreme Court’s directions, including the following:

  1. Opening of GST Common Portal: GSTN was directed to open the common portal for filing the relevant forms for availing transitional credit through TRAN-1 and TRAN-2 for the prescribed period.
  2. Filing or Revision by Aggrieved Registered Assessees: Any aggrieved registered assessee was permitted to file the relevant form or revise an already filed form, irrespective of whether the taxpayer had filed a writ petition before a High Court or whether the taxpayer’s case had been decided by the ITGRC.
  3. Avoidance of Technical Glitches: GSTN was required to ensure that taxpayers did not face technical glitches during the relevant period.
  4. Verification by Proper Officers: The concerned officers were granted 90 days thereafter to verify the correctness and genuineness of transitional credit claims and to pass appropriate orders on merits.
  5. Reasonable Opportunity: Before deciding the claim, an appropriate reasonable opportunity was required to be granted to the concerned parties.
  6. Reflection in Electronic Credit Ledger: Transitional credit allowed after verification was required to be reflected in the taxpayer’s Electronic Credit Ledger.
  7. GST Council Guidelines: If required, the GST Council could issue appropriate guidelines to field formations for scrutiny of transitional credit claims.

Applying those binding directions, the Kerala High Court held that the Supreme Court’s directions would apply to the petitioner’s case as well.

The Court further held that the petitioner would be entitled to the benefit of the extension of time granted by the Supreme Court in its order dated 2 September 2022.

Consequently, the writ petition was disposed of on those terms.

Important Clarification

This judgment is significant because the Kerala High Court did not create a separate or competing mechanism for transitional credit relief. Instead, it expressly applied the uniform framework laid down by the Supreme Court in Union of India vs Filco Trade Centre Pvt. Ltd.

A particularly important clarification emerging from the binding directions is that access to the TRAN-1/TRAN-2 filing or revision mechanism was not confined only to taxpayers who had already approached a High Court. The benefit extended to an aggrieved registered assessee irrespective of prior writ litigation or an ITGRC decision, subject to verification of the claim on merits.

The ruling also does not mean automatic allowance of every transitional credit claim. Filing or revising TRAN-1/TRAN-2 provides an opportunity to place the claim before the authorities. The concerned officers retain authority to verify the veracity of the claim, decide it on merits, and provide reasonable opportunity to the affected party.

Thus, the judgment distinguishes between:

  • the right to access the filing/revision mechanism, and
  • the substantive entitlement to transitional credit after verification.

Sections / Legal Provisions Involved

Section 140 of the Central Goods and Services Tax Act, 2017 — Transitional arrangements for input tax credit and migration of eligible pre-GST credit into the GST regime.

Corresponding provisions under the Kerala State Goods and Services Tax framework — Relevant to State-level transitional credit.

Form GST TRAN-1 — Form associated with declaration and carry-forward of eligible transitional credit under the GST transition framework.

Form GST TRAN-2 — Transitional form relevant to specified categories of registered persons claiming eligible credit in accordance with the applicable statutory framework.

Rule 117 of the CGST Rules, 2017 — Procedural framework historically governing submission of declarations relating to transitional credit, read with the applicable statutory provisions and judicial directions.

Article 226 of the Constitution of India — Constitutional writ jurisdiction invoked before the High Court.

Link to Download the Order-https://mytaxexpert.co.in/uploads/1783402544_1339compressed.pdf

 

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