2018 (10) TMI 1617 - HC - GST

Input tax credit - transitional credit - transition to GST Regime - distribution of input credit amongst its branch offices/locations which have separate registration under the Act - Section 140(8) of the Central Goods and Services Tax Act, 2017 - Held that - The Petitioners are entitled to distribute the Input Credit available with it as on 1st July 2017 amongst its branches/locations. This distribution has not been possible on account of technical problems of the Respondents. Further the availment of input tax credit available on 1st July 2017 has to be done on or before 20th October 2018 in view of Section 16(4) of the Act. Thus, it is likely that the Petitioners may be deprived of the facility of the input tax credit available with it on 1st July 2017, if the same is not taken before 20th October 2018. The Respondents have extended the time to file TRANS 1 and TRANS 2, but no such extension has been granted to extend the time to file GSTR 3B - thus, pending the final disposal of the Petition (when these issues will be considered in greater depth), as the system is not accepting it, the Petitioners would manually file with the Respondents a copy of its revised TRANS 1, ITC 01 and also GSTR 3B at Mumbai (in physical form). On the basis of the revised TRANS 1, ITC 02 and the GSTR 3B at Mumbai (to be certified by the Commissioner at Mumbai), the Petitioners will be entitled to take the credit reduced at Mumbai (Maharashtra) to its locations in Delhi, Gujarat and Karnataka subject to the satisfaction of the Commissioner having jurisdiction over those locations - petition disposed off.

Summary

Issues:
Transfer of Input Credit to GST regime, Technical difficulties in credit distribution, Entitlement to input tax credit, Time limit for availing credit, Extension of filing deadlines, Manual filing of forms, Inter-location credit transfer, Distinct person status for branches/locations, Jurisdictional Commissioner approval.

Transfer of Input Credit to GST regime:
The judgment addresses the issue of transferring Input Credit from the earlier CENVAT regime to the GST regime. It highlights a case where a business transferred a part of its operations and sought to carry forward its available Input Credit to the GST regime by filing TRANS-1. However, technical difficulties arose as the distribution of credit among branch offices was not reflected on the website, leading to the inability to utilize the credit in the GST ledger at branches. The judgment emphasizes the importance of transferring unutilized credit to the transferee in such cases.

Technical difficulties in credit distribution:
The judgment discusses technical challenges faced by businesses in distributing Input Credit among branch offices under the GST regime. It notes that despite the acceptance of revised TRANS-1, the system did not reflect the distribution, causing branches to be unable to utilize the credit for filing GSTR-3B. The court acknowledges the technical issues hindering the proper flow of Input Credit and emphasizes the need for resolution to ensure seamless credit utilization.

Entitlement to input tax credit and Time limit for availing credit:
The judgment clarifies that businesses are entitled to distribute Input Credit among locations as per Section 140(8) of the Act. It also highlights the importance of availing input tax credit before the specified deadline, as failing to do so could result in the lapse of credit. The court underscores the significance of complying with the provisions of the Act to safeguard businesses' rights to claim and utilize Input Credit effectively.

Extension of filing deadlines and Manual filing of forms:
The judgment mentions the extension granted for filing TRANS-1 and TRANS-2 but notes the absence of an extension for filing GSTR-3B. It emphasizes the need for businesses to manually file forms in cases where the system does not accept electronic submissions. The court directs the petitioners to submit physical copies of relevant forms to ensure the timely availment of Input Credit.

Inter-location credit transfer and Distinct person status for branches/locations:
The judgment addresses the issue of transferring credit from one location to another within the same business entity. It acknowledges that each registered location/branch is considered a distinct person under the Act, requiring approval from jurisdictional Commissioners for inter-location credit transfers. The court emphasizes the need for compliance with legal procedures and obtaining approval from relevant authorities for credit transfers between distinct locations.

Jurisdictional Commissioner approval:
The judgment highlights the importance of obtaining approval from jurisdictional Commissioners for transferring credits between locations. It stresses the need for satisfaction of the Commissioners overseeing different branches to ensure compliance with the law. The court grants liberty to apply for expedited processing of the petition, emphasizing the need for timely resolution of credit transfer issues.