Facts of the Case

The petitioner, M/s Visteon Technical and Services Centre Private Limited (formerly Allgo Embedded Systems Private Limited), a company registered under the Companies Act, 1956, had filed an application seeking Cenvat credit in GST TRAN-1 on 07.11.2022 before the Assistant Commissioner of Commercial Tax (respondent no. 3). The application was forwarded to the Joint Commissioner of Central Tax (respondent no. 2) for verification. A verification report was received on 21.02.2023, and on that basis respondent no. 3 passed an order dated 15.02.2023 (signed 28.02.2023) rejecting the claim, citing the petitioner's non-appearance and failure to submit supporting documents despite intimation. Aggrieved by this order, imposing what it called disproportionate penal liability, the petitioner approached the Karnataka High Court under Article 226 seeking to quash the order as illegal, arbitrary and non-speaking.

Issues Involved

  1. Whether the impugned order rejecting the TRAN-1 Cenvat credit claim, passed without adequate hearing, could be sustained.
  2. Whether the verification report dated 21.02.2023 relied upon by the adjudicating authority required fresh consideration in light of Circular No. 182/14/2022-GST.

Petitioner's Arguments

  • The impugned order was passed without granting the petitioner an adequate opportunity to appear and file objections to the verification report.
  • The order and the underlying verification report were non-speaking and imposed disproportionate penal liability without reasoned findings.
  • If the order and report are set aside and the matter remitted, the petitioner would appear before the Joint Commissioner, file objections, and make submissions bearing in mind Circular No. 182/14/2022-GST before a fresh report is submitted to the adjudicating authority.

Respondent's Arguments

  • The department did not seriously contest the petitioner's request for remand once the procedural gap in hearing was pointed out.
  • Respondents left it to the Court to direct a fresh, time-bound reconsideration in accordance with law.

Court Order / Findings

  • The Court found merit in the petitioner's submission that a fresh opportunity, consistent with Circular No. 182/14/2022-GST, was warranted before the claim could be finally decided.
  • The impugned order dated 15.02.2023 and the verification report dated 21.02.2023 were set aside in their entirety.
  • The petitioner was directed to appear before the Joint Commissioner on a fixed date, who shall grant a reasonable hearing and issue a fresh verification report; the Assistant Commissioner shall thereafter pass fresh orders bearing in mind Circular No. 182/14/2022-GST.
  • Liberty was reserved to the petitioner to file further pleadings and documents before both authorities.

Important Clarification

  • A TRAN-1/Cenvat credit verification report cannot form the basis of an adverse order unless the assessee is given a real opportunity to respond to it.
  • Circular No. 182/14/2022-GST, dealing with transitional credit verification, must guide the fresh adjudication on remand.
  • Courts routinely remit such transitional-credit disputes for a reasoned, hearing-based redetermination rather than deciding the entitlement on merits themselves.

Sections Involved

  • Section 140, CGST Act, 2017 – deals with transitional arrangements for input tax credit carried forward from the pre-GST regime, the substantive basis of TRAN-1 claims.
  • Circular No. 182/14/2022-GST dated 10.11.2022 – CBIC guidance on handling of transitional credit verification and adjudication.
  • Article 226, Constitution of India – writ jurisdiction invoked to challenge the non-speaking assessment order.

Decision – In Favour of

The writ petition was allowed in favour of the assessee on the ground of denial of a fair hearing; the Court did not examine the substantive entitlement to the TRAN-1 credit and remanded it for fresh adjudication, so the outcome is procedural relief in favour of the petitioner rather than a final merits victory.

Case Details

Court: High Court of Karnataka at Bengaluru. Case No.: Writ Petition No. 13099 of 2024 (T-RES). Neutral Citation: 2025:KHC:44366. Coram: Hon'ble Mr. Justice S.R. Krishna Kumar. Date of Order: 4th November, 2025.

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