Facts of the Case

The respondent, M/s Annapoorna Agencies, had approached the Karnataka High Court after being denied an opportunity to file Form GST TRAN-1 for claiming transitional input tax credit due to technical difficulties. The Single Judge had directed the GST authorities to reopen the portal for filing TRAN-1 or, if reopening was not possible, to accept the form manually and process the claim after verification.

Aggrieved by the said order, the Union of India and other GST authorities filed the present writ appeal before the Division Bench seeking to set aside the order of the learned Single Judge.

Issues Involved

  1. Whether the order of the learned Single Judge directing reopening of the GST portal for filing TRAN-1 required interference.
  2. Whether taxpayers should be permitted to file or revise TRAN-1 in view of the directions subsequently issued by the Hon'ble Supreme Court.
  3. Whether the GST authorities were required to verify and allow eligible transitional input tax credit after reopening the portal.

Petitioner’s (Appellants’) Arguments

The Union of India and the GST authorities challenged the order of the learned Single Judge and sought:

  • Setting aside of the order dated 10.11.2021 passed in W.P. No.103447/2021.
  • Dismissal of the writ petition filed by the respondent.
  • Reconsideration of the relief granted in respect of filing Form GST TRAN-1.

Respondent’s Arguments

The respondent supported the order of the learned Single Judge and submitted that:

  • The denial of an opportunity to file TRAN-1 resulted in the loss of legitimate transitional input tax credit.
  • The portal should be reopened or, alternatively, manual filing should be accepted.
  • The matter stood substantially covered by the directions subsequently issued by the Hon'ble Supreme Court regarding reopening of the GST portal for TRAN-1 and TRAN-2 filings.

Court Order / Findings

The Karnataka High Court observed that both parties agreed that the appeal could be disposed of in terms of the directions issued by the Hon'ble Supreme Court in the batch of Special Leave Petitions concerning transitional credit.

The Court noted that the Supreme Court had directed:

  • GSTN to reopen the common portal for filing or revising TRAN-1 and TRAN-2 from 01.09.2022 to 31.10.2022.
  • All eligible taxpayers to file or revise the relevant forms 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 no technical glitches occurred during the reopening period.
  • Jurisdictional officers to verify the claims within 90 days after granting reasonable opportunity of hearing.
  • Eligible transitional credit to be reflected in the Electronic Credit Ledger after verification.

In view of these binding directions of the Supreme Court, the Division Bench held that no interference was required with the order passed by the learned Single Judge.

Accordingly, the writ appeal was disposed of in terms of the directions issued by the Hon'ble Supreme Court.

Important Clarification

  • Taxpayers were permitted to file or revise TRAN-1 and TRAN-2 during the reopening period directed by the Supreme Court.
  • The benefit was available irrespective of whether a taxpayer had previously filed a writ petition or approached the IT Grievance Redressal Committee.
  • GST authorities are empowered to verify the genuineness of transitional credit claims before allowing the credit.
  • The Karnataka High Court followed and implemented the binding directions of the Hon'ble Supreme Court on transitional credit under the GST regime.

Sections Involved

  • Section 140 of the Central Goods and Services Tax Act, 2017
  • Rule 117 of the Central Goods and Services Tax Rules, 2017
  • Rule 117(1A) of the CGST Rules, 2017
  • Form GST TRAN-1
  • Form GST TRAN-2
  • Section 4 of the Karnataka High Court Act, 1961

Link to Download the Order

 https://www.mytaxexpert.co.in/uploads/1785567021_2531compressed.pdf 

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