Facts of the Case

The petitioner, M/s. Priya Agencies, was a registered taxpayer under the Goods and Services Tax (GST) regime. During the transition from the Value Added Tax (VAT) system to GST, the petitioner intended to carry forward eligible Input Tax Credit (ITC) by filing Form GST TRAN-1. However, due to failure to upload the required particulars within the prescribed time, the petitioner could not avail the transitional credit.

Subsequently, the petitioner requested the GST authorities to permit filing or rectification of TRAN-1. The request was rejected by the Deputy Commissioner on the ground that the application had been made after an inordinate delay. Aggrieved by this rejection, the petitioner approached the Karnataka High Court seeking quashing of the rejection order and permission to file or amend Form GST TRAN-1 for claiming the eligible transitional credit.

Issues Involved

  • Whether a registered taxpayer who failed to file or correctly submit Form GST TRAN-1 within the prescribed period could subsequently be permitted to claim transitional Input Tax Credit.
  • Whether the rejection of the petitioner's request solely on the ground of delay was sustainable after the directions issued by the Supreme Court in Union of India v. Filco Trade Centre Pvt. Ltd.
  • Whether similarly situated taxpayers should receive the benefit of reopening the GST portal for filing or revising TRAN-1.

Petitioner's Arguments

The petitioner contended that:

  • The inability to upload the required particulars in Form GST TRAN-1 during the transition period resulted in denial of legitimate transitional Input Tax Credit.
  • The rejection merely on the ground of delay was arbitrary, particularly when several taxpayers had faced identical technical and procedural difficulties during the implementation of GST.
  • The authorities ought to permit rectification and filing of TRAN-1 so that the petitioner could claim the eligible transitional credit and consequential relief in accordance with law.

Respondent's Arguments

The respondents submitted that:

  • The petitioner's request had been rejected because it was made after considerable delay beyond the prescribed statutory period.
  • Since the limitation period had expired, the petitioner was not entitled to seek reopening of the TRAN-1 filing process under the applicable provisions.

Court Order / Findings

The Karnataka High Court observed that numerous taxpayers had encountered similar difficulties during the transition from VAT to GST.

The Court took note of the judgment of the Hon'ble Supreme Court in Union of India & Another v. Filco Trade Centre Pvt. Ltd. & Another, whereby GSTN was directed to reopen the common portal for filing or revising TRAN-1 and TRAN-2 between 01.09.2022 and 31.10.2022 for all aggrieved registered taxpayers, irrespective of whether they had approached any High Court or the Information Technology Grievance Redressal Committee (ITGRC).

Following the Supreme Court's directions, the High Court held that the petitioner was equally entitled to the benefit of reopening of the GST portal.

Accordingly, the Court:

  • Permitted the petitioner to file the necessary details for availing transitional credit through Form GST TRAN-1 within the period specified by the Supreme Court or within any extended period granted to similarly situated taxpayers.
  • Directed the GST authorities to keep the portal open to facilitate such filing.
  • Directed that if the petitioner submitted the required particulars, the authorities should examine the claim in accordance with law and take an appropriate decision.
  • Disposed of the writ petition accordingly.

Important Clarification

This judgment reiterates that taxpayers who were unable to file or revise GST TRAN-1 due to procedural or technical issues during the transition to GST are entitled to the benefit of the Supreme Court's directions in Filco Trade Centre. The reopening of the GST portal applies broadly to all similarly situated registered taxpayers, and authorities are required to examine such claims on merits after filing.

Link to Download the Order

https://mytaxexpert.co.in/uploads/1785322951_2235compressed.pdf

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