Facts of the Case

The petitioner, Selffridges Private Limited, approached the High Court of Kerala in relation to the issue of availing Transitional Credit while migrating to the Goods and Services Tax regime.

The dispute concerned the petitioner’s attempt to avail transitional credit through the prescribed GST mechanism. The materials forming part of the writ petition indicated that the petitioner had stock details relevant to the transitional credit claim and had attempted to file GST TRAN-1 through the web portal.

The petitioner relied upon documentary materials including stock statements, closing stock inventory, screenshots of the web portal evidencing attempts to file GST TRAN-1, letters addressed to the departmental authorities, emails, replies received from the authorities and an earlier judgment.

The principal controversy before the Court related to the difficulties faced in filing or revising declarations for availing Transitional Credit during migration to the GST regime.

At the time of consideration of the writ petition, it was not disputed before the High Court that the issue raised 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.

 Issues Involved

The principal issues arising in the matter were:

  1. Whether the petitioner could be granted an opportunity to avail Transitional Credit while migrating to the GST regime.
  2. Whether the difficulties faced by taxpayers in filing or revising declarations for Transitional Credit through GST TRAN-1 and TRAN-2 stood governed by the directions issued by the Supreme Court in Union of India & Anr. vs Filco Trade Centre Pvt. Ltd. & Anr.
  3. Whether the Supreme Court’s directions permitting aggrieved registered assessees to file the relevant transitional credit forms or revise forms already filed would apply to the petitioner’s case.
  4. Whether the benefit of reopening the GST common portal for TRAN-1 and TRAN-2 claims extended irrespective of whether the 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).

 Petitioner’s Arguments

The petitioner’s case related to its inability or difficulty in effectively availing Transitional Credit during migration to the GST regime.

The petitioner placed materials on record to support its claim, including:

  • Relevant extracts of stock statements containing details of stock intended to be uploaded in GST TRAN-1;
  • Closing stock inventory as on 30 June 2017 uploaded under the applicable KVAT framework;
  • Order No. 9/2017-GST dated 15 November 2017;
  • Screenshot of the web portal evidencing attempts to file GST TRAN-1;
  • Communications and letters submitted to the authorities;
  • Earlier judicial proceedings and judgment;
  • Replies issued by departmental authorities; and
  • Emails and subsequent correspondence relating to the petitioner’s grievance.

In substance, the petitioner sought appropriate relief concerning availment of Transitional Credit in the GST regime.

The petitioner’s grievance was required to be considered in light of the subsequent authoritative directions issued by the Supreme Court in the Filco Trade Centre case.

 Respondent’s Arguments

The judgment does not record any elaborate or separate detailed arguments advanced by the respondents on the merits of the petitioner’s individual transitional credit claim.

Significantly, the High Court expressly recorded that it was not in dispute before the Court that the issue raised in the writ petition stood completely addressed by the Supreme Court judgment in Union of India & Anr. vs Filco Trade Centre Pvt. Ltd. & Anr., 2022 SCC OnLine SC 912.

Accordingly, the controversy was considered in the light of the binding directions issued by the Supreme Court concerning filing and revision of TRAN-1 and TRAN-2 forms and verification of Transitional Credit claims.

 Court Order / Findings

The High Court observed that the writ petition related to the issue of availing Transitional Credit while migrating to the Goods and Services Tax regime.

The Court specifically noted that the issue raised in the writ petition stood completely addressed by the Supreme Court judgment in Union of India & Anr. vs Filco Trade Centre Pvt. Ltd. & Anr., 2022 SCC OnLine SC 912.

The High Court referred to the directions issued by the Supreme Court on 22 July 2022 in the Filco Trade Centre matter and held that those directions would apply to the petitioner’s case as well.

Accordingly, the writ petition was disposed of on the terms of the Supreme Court directions.

 Supreme Court Directions Applied by the Kerala High Court

The High Court reproduced and applied the following substantive directions issued by the Supreme Court in Union of India & Anr. vs Filco Trade Centre Pvt. Ltd. & Anr.:

1. Opening of GST Common Portal for TRAN-1 and TRAN-2

The Goods and Services Tax Network (GSTN) was directed to open the common portal for filing the concerned forms for availing Transitional Credit through TRAN-1 and TRAN-2 for a period of two months, namely:

From 1 September 2022 to 31 October 2022.

2. Opportunity to All Aggrieved Registered Assessees

Any aggrieved registered assessee was permitted to:

  • File the relevant form; or
  • Revise the form already filed.

This opportunity was made available 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 Information Technology Grievance Redressal Committee (ITGRC).

3. GSTN to Ensure Absence of Technical Glitches

GSTN was required to ensure that no technical glitch occurred during the relevant period for filing or revising the transitional credit forms.

4. Verification of Transitional Credit Claims

The concerned officers were granted 90 days thereafter to:

  • Verify the veracity of the Transitional Credit claim;
  • Examine the claim on merits;
  • Grant an appropriate reasonable opportunity to the concerned parties; and
  • Pass appropriate orders.

5. Reflection of Allowed Credit in Electronic Credit Ledger

After verification and allowance of the claim, the permitted Transitional Credit was required to be reflected in the taxpayer’s Electronic Credit Ledger.

6. GST Council Guidelines

Where required, the GST Council could issue appropriate guidelines to field formations for scrutiny of Transitional Credit claims.

 Important Clarification

This judgment is significant because the High Court did not independently adjudicate or quantify the petitioner’s Transitional Credit entitlement on merits.

Instead, the Court applied the binding framework laid down by the Supreme Court in the Filco Trade Centre case.

Therefore, the judgment should not be understood as automatic approval of the petitioner’s entire Transitional Credit claim. The applicable framework contemplated:

  • Filing or revision of the relevant TRAN-1 or TRAN-2 form;
  • Verification of the veracity of the claim by the concerned officers;
  • Consideration of the claim on merits;
  • Grant of reasonable opportunity to the concerned taxpayer;
  • Passing of an appropriate order by the competent authority; and
  • Reflection of only the allowed Transitional Credit in the Electronic Credit Ledger.

A particularly important aspect of the Supreme Court directions, as applied by the High Court, was that the opportunity was not confined only to taxpayers who had already approached a High Court. The opportunity extended to any aggrieved registered assessee covered by the directions, irrespective of whether a writ petition had previously been filed or whether the ITGRC had already considered the taxpayer’s case.

 Sections / Statutory Provisions Involved

Section 140 of the Central Goods and Services Tax Act, 2017

The dispute concerns the statutory framework governing Transitional Arrangements for Input Tax Credit upon migration from the pre-GST indirect tax regime to the GST regime.

GST TRAN-1

GST TRAN-1 is the prescribed transitional form relevant to eligible taxpayers seeking to carry forward or avail specified categories of pre-GST credit into the GST framework, subject to the applicable statutory conditions.

GST TRAN-2

GST TRAN-2 is another transitional form covered by the Supreme Court’s directions in the Filco Trade Centre matter.

Rule 117 of the Central Goods and Services Tax Rules, 2017

Rule 117 forms part of the procedural framework relating to submission of declarations for Transitional Credit and is relevant to disputes involving filing or revision of TRAN-1 declarations.

Electronic Credit Ledger

The Supreme Court directions contemplated that Transitional Credit allowed after verification would be reflected in the taxpayer’s Electronic Credit Ledger.

Link to download the order -https://mytaxexpert.co.in/uploads/1783499099_1447compressed.pdf

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