Facts of the Case

The petitioners, C. Prasannakumaran Unnithan, Proprietor of M/s. C.B. Electricals, and Leena P. Nair, Proprietrix of M/s. C.B. Electricals, approached the Kerala High Court seeking relief regarding the availment of Transitional Input Tax Credit (ITC) during migration from the pre-GST indirect tax regime to the Goods and Services Tax (GST) regime.

The petitioners contended that they were unable to effectively avail or revise the transitional credit through Form GST TRAN-1 due to difficulties encountered during the migration process. They sought appropriate directions enabling them to claim the eligible transitional credit in accordance with law.

Issues Involved

  1. Whether registered taxpayers should be permitted to file or revise GST TRAN-1/TRAN-2 for claiming Transitional Input Tax Credit.
  2. Whether the benefit granted by the Supreme Court in Union of India & Another v. Filco Trade Centre Pvt. Ltd. & Another would extend to the petitioners.
  3. Whether taxpayers affected by technical or procedural issues during GST migration could avail transitional credit despite earlier difficulties.

Petitioners' Arguments

  • The petitioners submitted that they possessed legitimate entitlement to Transitional Input Tax Credit.
  • They argued that technical and procedural issues prevented them from effectively claiming the credit during migration to GST.
  • They requested directions permitting them to file or revise the necessary GST TRAN forms so that their eligible transitional credit could be considered in accordance with law.

Respondents' Arguments

The respondents relied upon the legal position governing transitional credit under the GST regime. During the pendency of the writ petitions, the Supreme Court delivered its judgment in Union of India & Another v. Filco Trade Centre Pvt. Ltd. & Another, issuing comprehensive directions for reopening the GST portal and permitting filing or revision of TRAN-1 and TRAN-2 by eligible taxpayers.

Accordingly, the respondents submitted that the controversy stood governed by the Supreme Court's directions.

Court Order / Findings

The Kerala High Court observed that the controversy involved in both writ petitions had been completely covered by the judgment of the Supreme Court in Union of India & Another v. Filco Trade Centre Pvt. Ltd. & Another (2022 SCC OnLine SC 912).

The Court noted the directions issued by the Supreme Court, which included:

  • GSTN shall reopen the common portal for filing or revising TRAN-1 and TRAN-2 from 01.09.2022 to 31.10.2022.
  • Every aggrieved registered taxpayer shall be entitled to file or revise the relevant forms irrespective of whether a writ petition had been filed or whether the matter had been considered by the IT Grievance Redressal Committee.
  • GSTN shall ensure that no technical glitches occur during the reopening period.
  • Proper officers shall verify the transitional credit claims within 90 days after filing and pass appropriate orders after granting reasonable opportunity of hearing.
  • Approved transitional credit shall thereafter be reflected in the Electronic Credit Ledger.
  • The GST Council may issue suitable guidelines for scrutiny of such claims.

Applying the above Supreme Court directions, the Kerala High Court disposed of both writ petitions on the same terms.

Important Clarification

  • This judgment does not independently decide the merits of the transitional credit claim.
  • The High Court merely applied the binding directions issued by the Supreme Court in Filco Trade Centre.
  • All eligible taxpayers facing similar issues regarding TRAN-1 or TRAN-2 filing were entitled to the benefit of the Supreme Court's directions.
  • Verification of the actual admissibility of Transitional ITC would continue to remain subject to scrutiny by the jurisdictional GST authorities.

Sections  Involved

  • Section 140 of the Central Goods and Services Tax Act, 2017 (Transitional Arrangements for Input Tax Credit)
  • Rule 117 of the CGST Rules, 2017
  • Form GST TRAN-1
  • Form GST TRAN-2
  • Transitional Input Tax Credit Provisions under GST
  • Supreme Court Judgment in Union of India & Another v. Filco Trade Centre Pvt. Ltd. & Another (2022 SCC OnLine SC 912)

Link to Download the Order

https://www.mytaxexpert.co.in/uploads/1785569960_2555compressed.pdf 

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