Facts of the Case

The petitioner, M/S S V Halavagali and Sons, a partnership firm represented by its partner Shidlingappa S/o Chandrakanth Halavagali, is registered under the GST Act and engaged in supply of goods under Chapters 8432, 31010010 and 10091090. It challenged before the Dharwad Bench of the Karnataka High Court (WP No. 102048 of 2023 (T-RES)) an order dated 20.02.2023 passed by the Superintendent of Central Excise, Gadag ('A' Range), rejecting its claim to carry forward CENVAT credit of Rs.6,18,796/- through a TRAN-1 declaration. A show cause notice dated 09.12.2022 questioned the returns; the petitioner replied claiming CENVAT credit on stock held as on 30.06.2017, and a further notice dated 06.02.2023 took the view that the claim, filed under Column 7(d) of Table 7 of the TRAN-1 form under Rule 117(4) of the CGST Rules, 2017, was ineligible.

Issues Involved

  1. Whether an inadvertent claim made under the wrong column of the TRAN-1 form (Column 7(d) instead of 7(b)) can be rejected outright, or should be examined on its merits under the correct column.
  2. Whether the writ court could grant relief notwithstanding the availability of a statutory appeal under Section 107 of the CGST Act against the impugned order.

Petitioner's Arguments

  • The claim for carrying forward CENVAT credit of Rs.6,18,796/- was inadvertently filed under Column 7(d) of the TRAN-1 form instead of the applicable Column 7(b), and supporting invoices and documents exist to justify the claim under 7(b).
  • Relied on a decision of the Madurai Bench of the Madras High Court (W.P.(MD) No.15531/2020) dealing with a similar inadvertent-column error, where the Court directed the authority to verify the claim under the correct column and grant relief if the claim was substantiated.

Respondent's Arguments

  • Contended that the impugned order was appealable under Section 107 of the CGST Act, and the petitioner ought to be relegated to that remedy rather than invoking writ jurisdiction.

Court Order/Findings

  • The Court examined the Madurai Bench precedent relied upon by the petitioner and found the facts materially similar — an inadvertent claim under the wrong column of the TRAN-1 form.
  • Where a TRAN-1 claim is filed under the wrong column due to inadvertent error but the taxpayer holds supporting invoices and documents for the claim under the correct column, the assessing authority must verify and consider the claim on its merits rather than reject it outright for the column-mismatch.
  • The impugned order and the consequential notice were set aside, and the matter remitted to the Superintendent of Central Excise to consider the petitioner's claim under Column 7(b) of the CGST Rules, granting consequential relief if the claim is substantiated by supporting documents.
  • The Court clarified it had not expressed any opinion on the merits of the claim itself, leaving that entirely to the authority, which was directed to process the claim within three months.

Important Clarification

  • A TRAN-1 transitional credit claim wrongly filed under an inapplicable column (e.g., 7(d) instead of 7(b)) due to inadvertent error should not be rejected on that technical ground alone if supporting documents exist for the correct column; the authority must verify and decide the claim on merits.
  • Availability of a statutory appeal under Section 107 does not always bar writ relief, particularly where a settled line of authority (here, the Madurai Bench precedent) already addresses the specific inadvertent-error scenario.
  • Courts setting aside such orders on remand typically clarify that they express no opinion on the ultimate merits of the credit claim, leaving that determination to the department within a time-bound framework.

Sections Involved

  • Rule 117(4), CGST Rules, 2017 — filing of the TRAN-1 declaration for transitional credit, including the columns of Table 7.
  • Section 107, CGST Act, 2017 — appeal to the Appellate Authority.
  • CENVAT Credit Rules (Central Excise law) — the source of the pre-GST credit sought to be carried forward.

Decision – In Favour of

The decision is in favour of the Assessee. The rejection order was set aside and the TRAN-1 claim remitted for reconsideration on merits under the correct column.

Related Case Laws

No directly on-point case notes are currently published on this site.

Case Details

  • Court: High Court of Karnataka, Dharwad Bench
  • Case No.: WP No. 102048 of 2023 (T-RES)
  • CNR: 2023:KHC-D:12831
  • Coram: Justice Anant Ramanath Hegde
  • Decision Date: 03.11.2023
  • Disposal Nature: Allowed; TRAN-1 rejection order set aside and claim remitted for reconsideration under Column 7(b) of CGST Rules

Link to Download the Order

Download the full judgment (PDF)

Disclaimer

This content is shared strictly for general information and knowledge purposes only. Readers should independently verify the information from reliable sources. It is not intended to provide legal, professional, or advisory guidance. The author and the organisation disclaim all liability arising from the use of this content. The material has been prepared with the assistance of AI tools.