Facts of the Case

The petitions were filed by VIBGYOR Drugs Pvt. Ltd., HSIL Limited, and Everest Organics Limited seeking the benefit of transitional Input Tax Credit (ITC) under the GST regime.

The petitioners contended that they were unable to carry forward eligible CENVAT/Input Tax Credit into GST due to technical glitches, restrictions in the GST portal, or inability to correctly file/revise Form GST TRAN-1. One petitioner also challenged the denial of transitional credit on capital goods received after the appointed day though duty had already been paid under the pre-GST regime. Another petitioner challenged denial of credit merely because it had been disclosed under an incorrect column in Form GST TRAN-1.

The petitioners requested reopening of the GST portal or acceptance of manual TRAN-1 forms so that legitimate transitional credit could be carried forward.

Issues Involved

  1. Whether taxpayers should be permitted to file or revise Form GST TRAN-1 for claiming eligible transitional Input Tax Credit.
  2. Whether transitional credit can be denied because of technical glitches or limitations in the GST portal.
  3. Whether eligible CENVAT credit can be denied merely due to procedural defects such as filing under an incorrect column.
  4. Whether reopening of the GST portal should be directed in view of the Supreme Court's decision in Union of India vs Filco Trade Centre Pvt. Ltd.

Petitioners' Arguments

  • Eligible transitional credit is a substantive vested right and cannot be denied because of technical or procedural difficulties.
  • The GST portal failed to facilitate proper filing or revision of TRAN-1.
  • Technical glitches should not deprive taxpayers of legitimate Input Tax Credit.
  • Capital goods received after the appointed day, where duty had already been paid under the pre-GST regime, should qualify for transitional credit.
  • Credit cannot be denied merely because it was reported under an incorrect column in TRAN-1.
  • The authorities should either reopen the portal or accept manual filing of TRAN-1.

Respondents' Arguments

  • The Revenue relied upon the legal provisions governing transitional credit under Section 140 of the CGST Act and Rule 117 of the CGST Rules.
  • During hearing, it was submitted that the controversy already stood covered by the judgment of the Supreme Court in Union of India vs Filco Trade Centre Pvt. Ltd., wherein directions had been issued regarding reopening of the GST portal for filing or revising TRAN-1 and TRAN-2.

Court Order / Findings

The Telangana High Court observed that the controversy was squarely covered by the decision of the Supreme Court in Union of India vs Filco Trade Centre Pvt. Ltd. (2022 SCC OnLine SC 912).

Following the directions of the Supreme Court, the High Court disposed of all the writ petitions by directing that the petitioners would be governed by the relief granted in Filco Trade Centre Pvt. Ltd.

The Court noted that the Supreme Court had directed:

  • Reopening of the common GST portal for filing or revising TRAN-1 and TRAN-2.
  • Removal of technical glitches during the reopening period.
  • Verification of transitional credit claims by the concerned authorities.
  • Reflection of admissible transitional credit in the Electronic Credit Ledger after verification.

Accordingly, all the writ petitions were disposed of without costs.

Important Clarification

  • Transitional Input Tax Credit is not to be denied solely because of technical glitches in the GST portal.
  • Filing or revision of TRAN-1/TRAN-2 is governed by the directions issued by the Supreme Court in Union of India vs Filco Trade Centre Pvt. Ltd.
  • Authorities are required to verify eligible claims and allow admissible transitional credit in accordance with the Supreme Court's directions.
  • Procedural lapses should not automatically defeat a taxpayer's substantive entitlement where relief is available under the law.

Sections Involved

  • Section 140 of the Central Goods and Services Tax Act, 2017
  • Section 174 of the Central Goods and Services Tax Act, 2017
  • Rule 117 of the Central Goods and Services Tax Rules, 2017
  • Articles 14, 19(1)(g), 265 and 300A of the Constitution of India
  • Article 226 of the Constitution of India

Link to Download the Order https://www.mytaxexpert.co.in/uploads/1784272517_1148compressed.pdf

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