Facts of the Case

M/s Malika Veetil Agencies, represented by its proprietor, approached the Kerala High Court in a writ petition concerning the issue of availing Transitional Credit while migrating to the Goods and Services Tax regime.

The dispute arose in the context of taxpayers facing difficulties in filing or revising declarations required for carrying forward transitional credit into the GST regime.

The record of the case, as reflected in the appendix to the judgment, included, among other documents:

  • a representation dated 7 May 2018;
  • purchase bills dated 24 June 2017 and 25 June 2017;
  • a Chartered Accountant’s stock take report dated 1 November 2017;
  • a GST Helpdesk reply dated 8 May 2018;
  • a notice dated 11 May 2018;
  • the petitioner’s reply dated 14 May 2018;
  • an affidavit dated 3 July 2018;
  • an application dated 31 October 2018;
  • Circular No. 39/13/2018-GST dated 3 April 2018; and
  • earlier judicial orders and judgments concerning the grievance.

When the writ petition came before the Kerala High Court, it was not disputed that the issue raised stood completely addressed by the Supreme Court judgment in Union of India & Another vs Filco Trade Centre Pvt. Ltd. & Another, 2022 SCC OnLine SC 912.

Issues Involved

The principal issues involved were:

  1. Whether the petitioner could avail Transitional Credit while migrating to the GST regime.
  2. Whether a taxpayer facing difficulty in filing or revising the relevant transitional credit declaration should receive the benefit of the Supreme Court directions governing TRAN-1 and TRAN-2.
  3. Whether the directions issued by the Supreme Court in Union of India & Another vs Filco Trade Centre Pvt. Ltd. & Another applied to the petitioner’s case.
  4. Whether an aggrieved registered assessee could file the relevant transitional credit form or revise an already-filed form irrespective of prior writ proceedings or consideration by the Information Technology Grievance Redressal Committee.
  5. Whether the GST authorities were required to verify transitional credit claims on merits after granting reasonable opportunity to the taxpayer.
  6. Whether allowed transitional credit was required to be reflected in the Electronic Credit Ledger after verification.

Petitioner’s Arguments

The uploaded judgment does not separately record an elaborate, issue-wise reproduction of the petitioner’s oral submissions.

However, the petitioner’s case concerned the right to avail Transitional Credit during migration to the GST regime, in the background of difficulties associated with filing or revising the relevant declarations.

The petitioner sought relief concerning transitional credit, and the case was considered in light of the binding Supreme Court ruling in Union of India & Another vs Filco Trade Centre Pvt. Ltd. & Another.

The petitioner’s documentary record also showed that the grievance had been pursued through representations, GST Helpdesk correspondence, replies, an application and reliance upon Circular No. 39/13/2018-GST dated 3 April 2018.

Respondents’ Arguments

The uploaded judgment does not set out detailed independent arguments of each respondent.

The decisive position recorded by the Kerala High Court was 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 & Another vs Filco Trade Centre Pvt. Ltd. & Another, 2022 SCC OnLine SC 912.

Accordingly, the controversy was resolved by applying the Supreme Court’s directions to the petitioner’s case rather than undertaking a fresh adjudication of the transitional credit issue.

Court Order / Findings

The Kerala High Court found that the issue involved in the writ petition was fully covered by the Supreme Court judgment in:

Union of India & Another vs Filco Trade Centre Pvt. Ltd. & Another, 2022 SCC OnLine SC 912

The High Court noted that, having regard to the difficulties faced by taxpayers in filing or revising declarations and availing Transitional Credit while migrating to the GST regime, the Supreme Court had issued specific directions.

The Kerala High Court reproduced and applied those directions to the case at hand.

The directions, in substance, were:

  1. GSTN was directed to open the common portal for filing the concerned forms for availing Transitional Credit through TRAN-1 and TRAN-2 for two months, from 1 September 2022 to 31 October 2022.
  2. 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 Information Technology Grievance Redressal Committee (ITGRC).
  3. GSTN was required to ensure that there were no technical glitches during the relevant period.
  4. The concerned officers were granted 90 days thereafter to:
    • verify the veracity of the transitional credit claim;
    • pass appropriate orders on merits; and
    • grant appropriate reasonable opportunity to the concerned parties.
  5. The transitional credit ultimately allowed was required to be reflected in the Electronic Credit Ledger.
  6. If necessary, the GST Council could issue appropriate guidelines to field formations for scrutiny of the claims.

The Kerala High Court expressly held that the above Supreme Court directions would apply to the petitioner’s case as well.

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

Important Clarification

This judgment does not hold that every transitional credit claim must automatically be allowed merely because the taxpayer files or revises TRAN-1 or TRAN-2.

The legal effect of the ruling is that an eligible aggrieved registered assessee receives the benefit of the filing or revision mechanism directed by the Supreme Court in Filco Trade Centre.

The claim remains subject to:

  • verification of its veracity by the concerned officers;
  • consideration on merits;
  • grant of appropriate reasonable opportunity to the taxpayer; and
  • passing of an appropriate order.

Only the allowed Transitional Credit is to be reflected in the Electronic Credit Ledger.

Another significant clarification is that the Supreme Court’s directions were framed broadly enough to cover an aggrieved registered assessee irrespective of whether the taxpayer had earlier filed a writ petition before a High Court or whether the case had been decided by the ITGRC.

Therefore, the Kerala High Court did not create a separate or independent transitional credit mechanism; it directly applied the binding framework laid down by the Supreme Court.

Sections / Provisions Involved

Section 140 of the Central Goods and Services Tax Act, 2017 – Transitional Arrangements for Input Tax Credit

The subject matter concerns carry-forward and availment of transitional credit upon migration to the GST regime. Although the short Kerala High Court judgment primarily frames the controversy as one of Transitional Credit and applies the Supreme Court’s Filco Trade Centre directions, Section 140 of the CGST Act, 2017 is the principal statutory provision governing transitional input tax credit.

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

Rule 117 is materially connected with the prescribed declaration mechanism for transitional credit, including FORM GST TRAN-1, subject to the applicable statutory and judicial framework.

FORM GST TRAN-1

Relevant declaration mechanism for specified transitional credit claims while migrating to the GST regime.

FORM GST TRAN-2

Relevant transitional credit form specifically included within the Supreme Court’s portal-opening directions reproduced and applied by the Kerala High Court.

Circular No. 39/13/2018-GST dated 3 April 2018

This circular formed part of the petitioner’s documentary record and concerned the grievance-redressal framework for taxpayers facing technical difficulties.

Article 226 of the Constitution of India

The proceedings were instituted as a writ petition before the Kerala High Court. The Court disposed of the matter by applying the binding Supreme Court directions governing transitional credit.

Related Case Law in Detail

1. Union of India & Another vs Filco Trade Centre Pvt. Ltd. & Another, 2022 SCC OnLine SC 912

This is the controlling and directly applied Supreme Court precedent in the present case.

The Kerala High Court expressly recorded that the issue raised in the writ petition stood completely addressed by this Supreme Court judgment.

The Supreme Court addressed difficulties faced by taxpayers while filing or revising declarations for availing Transitional Credit during migration to GST. The directions ensured a common opportunity for aggrieved registered assessees to file or revise TRAN-1 and TRAN-2, followed by departmental verification on merits.

The most important aspects of the precedent, as reproduced in the Kerala High Court judgment, were:

  • reopening of the common portal;
  • opportunity to file or revise TRAN-1 and TRAN-2;
  • applicability irrespective of earlier High Court writ proceedings;
  • applicability irrespective of ITGRC decisions;
  • obligation on GSTN to avoid technical glitches;
  • 90-day verification period for concerned officers;
  • reasonable opportunity to affected parties;
  • reflection of allowed credit in the Electronic Credit Ledger; and
  • possibility of GST Council guidelines for field formations.

The Kerala High Court applied these directions directly to M/s Malika Veetil Agencies.

2. Earlier Kerala High Court and Appellate Proceedings Reflected in the Case Record

The appendix to the judgment records earlier judicial materials, including:

  • a judgment of the Kerala High Court in W.P.(C) No. 41337 of 2018 dated 12 February 2019;
  • a judgment in Writ Appeal No. 375 of 2020 dated 3 March 2020;
  • a judgment dated 27 February 2019 in C.C.C. No. 21 of 2019 in W.P.(C) No. 12592 of 2018; and
  • a judgment dated 25 July 2019 in C.C.C. No. 808 of 2019 in W.P.(C) No. 25531 of 2018.

These proceedings appear in the exhibit list forming part of the record. However, the operative judgment does not discuss their legal reasoning in detail. Therefore, their ratio should not be attributed to the Court beyond what is actually stated in the uploaded order.

The decisive authority expressly relied upon and applied was Union of India & Another vs Filco Trade Centre Pvt. Ltd. & Another.

Link to download the order -

https://mytaxexpert.co.in/uploads/1783335087_1142compressed.pdf

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