2019 (4) TMI 1493 - HC - GST

Levy of GST - revision of Form TRAN-1 - distribution of credit - HELD THAT - This Court is of the opinion that the GSTR-3B form which is now taken on record manually should be properly verified, in coordination with the concerned Commissionerate, pending final decision and appropriate orders by the GST officials/Commissioner, on the merits of these input claims. No demand shall be imposed by the respondents towards the interest claims, which are said to be approved. In other words, the claim of the petitioners for the set-off of its credit towards the notional demand of ₹16.80 crores shall be duly verified in accordance with law. List on 27th March, 2019 for consideration of the action taken pursuant to this order.

Summary

Issues:
1. Interpretation of GST laws regarding the distribution of Input Tax Credit (ITC) claimed through FORM GST TRAN-01.
2. Permissibility of manual filing of GSTR-3B due to design limitations experienced by the petitioner.
3. Final acceptance of the proposed solution by the GST Council.
4. Similarity to a previous case involving improper distribution of input credit.
5. Verification process directed by the Bombay High Court for local area claims and input credits.
6. Liability of the petitioner to pay reconciled amounts in cash and approval of interest liability.
7. Verification of the manually filed GSTR-3B form by the concerned Commissionerate pending final decision.
8. No imposition of demand by respondents towards interest claims.
9. Requirement for the petitioner to take necessary steps for the completion of proceedings.

Analysis:
1. The judgment addresses the interpretation of GST laws concerning the distribution of Input Tax Credit (ITC) claimed through FORM GST TRAN-01. The Law Committee's decision highlighted the necessity for recipients to pay back wrongly distributed credits along with interest under Section 73 through FORM GST DRC-03, emphasizing the complexities involved in downward revisions of credit distribution due to system design limitations.

2. The Court previously allowed the petitioner to file GSTR-3B manually due to design limitations faced during attempts to revise Form TRAN-1, resulting in an excess credit of ?16.80 crores in the electronic ledger. The order acknowledged the difficulties faced and directed the matter to be listed for further consideration.

3. The judgment mentions the need for final acceptance of the proposed solution by the GST Council, indicating that the solution proposed by the petitioner would be subject to the council's approval, as directed in previous orders dated 17.09.2018 and 10.12.2018.

4. Referring to a similar case involving improper distribution of input credit, the judgment cited a previous order dealing with a party facing a comparable issue. The order directed the respondents to permit manual filing of GSTR-3 form to claim transitional and post-01.07.2017 input tax credit, emphasizing the importance of reflecting Tran-1 credit in GSTR-3 for credit availability.

5. The judgment highlighted the Bombay High Court's directive for verification of claims and input credits in local areas, emphasizing the need for verification processes to ensure accurate assessment and issuance of certificates before proceeding with further verifications.

6. During the hearing, the respondent suggested that the petitioner might not need to pay reconciled amounts in cash, indicating a possible approval of interest liability. This aspect is crucial in determining the financial obligations of the petitioner in the reconciliation process.

7. The Court emphasized the need for proper verification of the manually filed GSTR-3B form in coordination with the concerned Commissionerate, pending final decisions by GST officials. It directed no imposition of demands towards interest claims, ensuring fair assessment and verification of the petitioner's credit set-off claims.

8. The judgment clarified that no demand should be imposed by respondents towards interest claims, which are reportedly approved, indicating a fair approach towards resolving financial liabilities and ensuring compliance with legal requirements.

9. Lastly, the petitioner was instructed to take necessary steps to facilitate the completion of proceedings, with a future date set for consideration of actions taken pursuant to the Court's order, ensuring follow-up and progress monitoring in the case.