Facts of the Case

M/s Kwality Die Casting Pvt. Ltd. encountered technical difficulties while attempting to file the statutory forms required for claiming transitional Input Tax Credit under the GST regime. The taxpayer had raised a grievance before the IT Grievance Redressal Committee (ITGRC); however, the grievance ticket was closed without granting effective relief.

The taxpayer approached the Karnataka High Court by filing a writ petition. The learned Single Judge quashed the closure of the grievance ticket and directed the authorities to reopen the GST portal to enable filing of the required forms or, alternatively, permit manual filing of the forms and process the claim in accordance with law.

Aggrieved by the said order, both the Union of India and the State authorities preferred writ appeals before the Division Bench.

Issues Involved

  1. Whether the order of the learned Single Judge directing reopening of the GST portal or acceptance of manual filing for TRAN-1/TRAN-2 forms required interference.
  2. Whether taxpayers facing technical glitches should be permitted to claim transitional Input Tax Credit in light of the Supreme Court's directions.
  3. Whether the closure of the grievance ticket by the ITGRC was legally sustainable.

Petitioner's Arguments (Respondent before the Appeals)

The taxpayer contended that:

  • Transitional credit could not be claimed due to technical problems on the GST portal.
  • Closure of the grievance ticket deprived the taxpayer of the statutory benefit available under Section 140 of the CGST Act.
  • The authorities should provide an effective mechanism for filing TRAN forms so that legitimate transitional credit is not denied merely because of technical issues.
  • The directions issued by the learned Single Judge were justified and consistent with law.

Respondents' (Appellants') Arguments

The Union of India and the State authorities challenged the Single Judge's order and sought its reversal through the writ appeals.

However, during the hearing, both sides submitted that the controversy stood substantially covered by the subsequent judgment of the Hon'ble Supreme Court directing reopening of the GST portal for filing or revising TRAN-1 and TRAN-2 forms.

Court Order / Findings

The Karnataka High Court observed that the controversy was squarely governed by the directions issued by the Hon'ble Supreme Court in the connected Special Leave Petitions relating to transitional credit.

The Supreme Court had directed:

  • GSTN to reopen the common portal for filing or revising TRAN-1 and TRAN-2 forms during the specified period.
  • All eligible taxpayers to be permitted to file or revise the forms irrespective of whether they had approached the High Court or whether their cases had been considered by the ITGRC.
  • GSTN to ensure that there were no technical glitches during the reopening period.
  • Jurisdictional officers to verify the claims within 90 days after providing reasonable opportunity of hearing.
  • Admissible transitional credit to be reflected in the Electronic Credit Ledger.

In view of these binding directions, the Division Bench held that no interference with the Single Judge's order was warranted. Consequently, both writ appeals were disposed of in terms of the Supreme Court's directions.

Important Clarification

This judgment reinforces that:

  • Genuine transitional Input Tax Credit cannot be denied merely because of technical glitches on the GST portal.
  • Taxpayers are entitled to file or revise TRAN-1/TRAN-2 forms in accordance with the directions issued by the Supreme Court.
  • Even taxpayers whose grievances had been rejected or whose ITGRC complaints had been closed could obtain relief under the Supreme Court's framework.
  • Verification of the claim remains subject to scrutiny by the proper officer on merits.

Sections Involved

  • Section 140 of the Central Goods and Services Tax Act, 2017 – Transitional Arrangements for Input Tax Credit
  • Relevant provisions relating to TRAN-1 and TRAN-2 filing
  • Constitutional jurisdiction under Articles 226/227 (as applicable in the writ proceedings)

Link to Download the Order

https://www.mytaxexpert.co.in/uploads/1785566772_2507compressed.pdf  

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