Facts of the Case

The present writ appeals were filed by the Union of India and the State Tax Authorities challenging the order passed by the learned Single Judge in Writ Petition No.104152/2021.

The Single Judge had partially allowed the writ petition filed by M/s Kwality Die Casting Pvt. Ltd. by quashing the closure of the grievance ticket raised by the assessee regarding filing of transitional credit forms. The Court directed the authorities to reopen the GST portal to enable the petitioner to upload the necessary forms. In the alternative, if reopening of the portal was not feasible, the authorities were directed to accept hard copies of the forms and process the claim after verification.

During the pendency of the writ appeals, the Hon'ble Supreme Court issued comprehensive directions in connected matters relating to reopening of the GST portal for filing or revising TRAN-1 and TRAN-2 forms.

Accordingly, both parties submitted that the appeals could be disposed of in terms of the Supreme Court's directions.

Issues Involved

  1. Whether the order directing reopening of the GST portal for filing TRAN-1/TRAN-2 forms required interference in appeal.
  2. Whether taxpayers should be permitted to file or revise transitional credit forms despite earlier technical difficulties.
  3. Whether the subsequent directions of the Hon'ble Supreme Court governed the controversy involved in the present appeals.

Petitioner's Arguments (M/s Kwality Die Casting Pvt. Ltd.)

  • The petitioner was prevented from filing the necessary transitional credit forms due to technical issues on the GST portal.
  • Closure of the grievance ticket deprived the petitioner of its legitimate transitional credit.
  • The authorities should either reopen the GST portal or accept manual filing of the prescribed forms.
  • Transitional credit should not be denied merely because of technical glitches beyond the control of the taxpayer.

Respondents' Arguments (Union of India & State Tax Authorities)

  • The Union of India and the State Authorities challenged the order passed by the learned Single Judge before the Division Bench.
  • During the hearing, both sides submitted that the controversy had already been addressed by the Hon'ble Supreme Court through its order dated 22.07.2022 concerning reopening of the GST portal for TRAN-1 and TRAN-2 filings.
  • Therefore, the appeals could be disposed of in accordance with the Supreme Court's directions.

Court Order / Findings

The Karnataka High Court observed that the Hon'ble Supreme Court had already issued binding directions regarding reopening of the GST portal for filing or revising TRAN-1 and TRAN-2 forms.

The Supreme Court directed:

  • GSTN to reopen the common portal from 01.09.2022 to 31.10.2022.
  • Eligible taxpayers to file or revise TRAN-1 and TRAN-2 irrespective of whether they had approached any High Court or whether their cases had been decided by the IT Grievance Redressal Committee.
  • GSTN to ensure that there were no technical glitches during the reopening period.
  • Jurisdictional officers to verify the claims within 90 days after granting reasonable opportunity of hearing.
  • Allowed transitional credit to be reflected in the Electronic Credit Ledger.
  • GST Council, if necessary, to issue appropriate guidelines for scrutiny of such claims.

Since the Supreme Court had already settled the issue, the Division Bench held that no interference was warranted with the order of the learned Single Judge.

Accordingly, both writ appeals were disposed of in terms of the directions issued by the Hon'ble Supreme Court.

Important Clarification

  • The judgment reinforces that taxpayers cannot be denied transitional credit solely because of technical difficulties encountered on the GST portal.
  • The decision follows and implements the binding directions of the Hon'ble Supreme Court regarding reopening of the TRAN-1 and TRAN-2 filing facility.
  • Authorities are required to verify the claims on merits after providing a reasonable opportunity to the taxpayer.
  • Genuine transitional credit claims are to be reflected in the Electronic Credit Ledger after verification.

Sections Involved

  • Section 140 of the Central Goods and Services Tax Act, 2017 (Transitional Input Tax Credit)
  • Transitional Credit through FORM GST TRAN-1 and TRAN-2
  • Section 4 of the Karnataka High Court Act, 1961
  • Directions issued by the Hon'ble Supreme Court regarding reopening of GST Portal for Transitional Credit

Link to Download the Order

https://www.mytaxexpert.co.in/uploads/1785566970_2526compressed.pdf  

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