Facts of the Case

The petitioner, Universal Pipes, 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 arose due to difficulties in filing the prescribed declarations required for carrying forward eligible credit into GST.

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 (2022 SCC OnLine SC 912), addressing identical issues relating to the filing and revision of TRAN-1 and TRAN-2 forms.

 Issues Involved

  1. Whether the petitioner was entitled to avail transitional Input Tax Credit under Section 140 of the CGST Act despite earlier difficulties in filing TRAN-1/TRAN-2.
  2. Whether the directions issued by the Hon'ble Supreme Court in Filco Trade Centre Pvt. Ltd. would apply to the petitioner's case.
  3. Whether GST authorities were required to permit filing or revision of TRAN forms and verify the claim thereafter.

 Petitioner's Arguments

  • The petitioner submitted that eligible transitional credit could not be carried forward because of issues encountered while migrating to the GST regime.
  • It was contended that the petitioner should not be denied legitimate Input Tax Credit merely due to procedural or technical difficulties.
  • The petitioner sought permission to file or revise the relevant TRAN forms and claim the admissible transitional credit.

 Respondents' Arguments

  • The respondents represented the Union of India and the GST authorities.
  • During the hearing, it was acknowledged that the controversy stood substantially covered by the decision of the Hon'ble Supreme Court in Filco Trade Centre Pvt. Ltd.
  • Accordingly, the respondents accepted that the matter was governed by the directions issued by the Supreme Court.

Court Order / Findings

The Kerala High Court observed that the dispute raised in the writ petition had already been conclusively addressed by the Hon'ble Supreme Court in Union of India & Another vs Filco Trade Centre Pvt. Ltd. & Another (2022 SCC OnLine SC 912).

The Court noted the Supreme Court's directions, which included:

  • Reopening the GST portal for filing or revising TRAN-1 and TRAN-2 from 01.09.2022 to 31.10.2022.
  • Allowing every aggrieved registered taxpayer to file or revise the relevant forms irrespective of whether any writ petition had been filed or decided.
  • Directing GSTN to ensure that no technical glitches occur during the reopening period.
  • Granting the jurisdictional authorities 90 days to verify the claims on merits after providing a reasonable opportunity of hearing.
  • Directing that admissible transitional credit be reflected in the Electronic Credit Ledger.
  • Permitting the GST Council to issue suitable guidelines for scrutiny of such claims.

Holding that these directions squarely covered the petitioner's case, the High Court disposed of the writ petition in terms of the Supreme Court's judgment.

 Important Clarification

  • The judgment reiterates that taxpayers facing genuine difficulties in claiming transitional credit are entitled to the benefit of the Supreme Court's decision in Filco Trade Centre Pvt. Ltd.
  • The reopening of the GST portal applies irrespective of whether the taxpayer had earlier approached the High Court or the IT Grievance Redressal Committee.
  • The claim for transitional credit remains subject to verification by the competent GST authorities.
  • The decision reinforces the principle that procedural and technical difficulties should not deprive eligible taxpayers of lawful transitional Input Tax Credit.

Sections Involved

  • Section 140 of the Central Goods and Services Tax Act, 2017
  • Rule 117 of the CGST Rules, 2017
  • Transitional Input Tax Credit (ITC)
  • TRAN-1
  • TRAN-2

Link to Download the Order

https://mytaxexpert.co.in/uploads/1785134799_2018compressed.pdf

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