Facts of the Case

The petitioner, M/s Oscar Wood Industries, approached the Kerala High Court seeking relief regarding the inability to avail Transitional Input Tax Credit (ITC) while migrating from the earlier indirect tax regime to the Goods and Services Tax (GST) regime.

The grievance pertained to the filing/revision of GST TRAN-1/TRAN-2, which prevented the petitioner from carrying forward eligible tax credits into the GST regime. During the pendency of the writ petition, the Hon'ble Supreme Court delivered its landmark judgment in Union of India & Another vs Filco Trade Centre Pvt. Ltd. & Another, which comprehensively addressed the issue of transitional credit for all eligible taxpayers.

Accordingly, the Kerala High Court considered the petition in light of the directions issued by the Supreme Court.

Issues Involved

  1. Whether the petitioner should be permitted to file or revise GST TRAN-1/TRAN-2 for claiming Transitional Input Tax Credit.
  2. Whether the benefit of the Supreme Court's decision in Filco Trade Centre Pvt. Ltd. would extend to the petitioner's case.
  3. Whether eligible taxpayers should be granted an opportunity to claim transitional credit despite earlier procedural or technical difficulties.

Petitioner's Arguments

  • The petitioner contended that it was unable to avail Transitional Input Tax Credit during migration to the GST regime.
  • It sought permission to file or revise the required TRAN forms to claim the eligible credit.
  • The petitioner requested that the benefit of judicial directions relating to transitional credit be extended to its case.

Respondents' Arguments

The matter was effectively governed by the decision of the Hon'ble Supreme Court in Union of India & Another vs Filco Trade Centre Pvt. Ltd. & Another, which had already prescribed a uniform mechanism for reopening the GST portal and permitting eligible taxpayers to file or revise TRAN-1/TRAN-2 forms.

Court Order / Findings

The Kerala High Court observed that the controversy raised by the petitioner stood fully covered by the Supreme Court's judgment in Filco Trade Centre Pvt. Ltd.

Accordingly, the Court held that the directions issued by the Supreme Court would govern the petitioner's case and disposed of the writ petition in those terms.

The Court noted the following directions issued by the Supreme Court:

  • GSTN shall reopen the common portal for filing or revising TRAN-1 and TRAN-2.
  • Every aggrieved registered taxpayer shall be permitted to file or revise the relevant forms irrespective of whether a writ petition had been filed or whether the matter had earlier been decided by the IT Grievance Redressal Committee (ITGRC).
  • GSTN shall ensure that no technical glitches occur during the reopening period.
  • Tax authorities shall verify the genuineness of the transitional credit claims within the prescribed period after providing reasonable opportunity of hearing.
  • The admissible Transitional Credit shall thereafter be reflected in the Electronic Credit Ledger.
  • GST Council may issue suitable guidelines for scrutiny of such claims, if necessary.

Important Clarification

  • The Kerala High Court did not independently adjudicate the merits of the Transitional Credit claim.
  • The Court simply applied the binding directions of the Supreme Court in Union of India & Another vs Filco Trade Centre Pvt. Ltd. & Another.
  • The benefit of reopening TRAN-1/TRAN-2 was made available to all eligible registered taxpayers, irrespective of whether they had approached the High Court.
  • Verification of the Transitional Credit remains subject to scrutiny by the jurisdictional GST authorities on merits.

Key Legal Principle

Where the issue relates to the filing or revision of GST TRAN-1/TRAN-2 for claiming Transitional Input Tax Credit, the directions issued by the Hon'ble Supreme Court in Union of India & Another vs Filco Trade Centre Pvt. Ltd. & Another are binding and apply uniformly to all eligible taxpayers.

Sections Involved

  • Section 140 of the Central Goods and Services Tax Act, 2017 – Transitional Arrangements for Input Tax Credit
  • Rule relating to Form GST TRAN-1 & TRAN-2
  • Transitional Credit under the GST Regime

Link to Download the Order-https://www.mytaxexpert.co.in/uploads/1784805266_1915.pdf

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