2019 (11) TMI 1086 - HC - GST

Accumulation of input tax credit - rectification of bona fide error occurred while filing Form GST TRAN -1 - HELD THAT - It is not in dispute in the instant case that the input tax credit accumulated in the account of the petitioner was validly taken during the pre-GST period. The returns filed by the petitioner during the relevant period have all been accepted by the revenue authorities and, in the absence of a requirement to migrate to the GST regime, the petitioner would have been able to distribute the credit to its various branches through the input service distribution mechanism that was in place prior to the introduction of the GST Act. Although the petitioner has since obtained a registration as an input service distributor under the GST Act, the non-availability of the details of the purchase invoices, on the strength of which the input credit was availed, virtually prevents the petitioner from pursuing the Form GST TRAN -1 already filed by it before the 5th respondent. However, if the petitioner is permitted to file individual Form GST TRAN-1 in respect of each of the recipient branches, then the accumulated credit could be distributed to its various branches without having to furnish details of the invoices, on the strength of which the credit was taken during the relevant time before the introduction of GST. In effect, this procedure would facilitate the transfer of credit in a situation where the accumulation of credit as also the entitlement of the petitioner to distribute the credit to its various branches is not in dispute. Delhi High Court in M/S. BLUE BIRD PURE PVT. LTD. VERSUS UNION OF INDIA ORS. 2019 (7) TMI 1102 - DELHI HIGH COURT , where, taking note of the contention of the respondents regarding the technical difficulty in permitting assessees to transfer accumulated credit to the GST regime, it was observed that the Department should either open the online portal so as to enable the assessee to file rectified TRAN -1 Form electronically or accept manually filed TRAN-1 Form with correction before a specified date so as to render justice to the assessees. In the instant case, the availment of credit by the petitioner, and its entitlement to distribute the credit to its various branches is not disputed. The 5th respondent should either permit the petitioner to file a rectified TRAN-1 Form electronically in favour of each of its branches in the country, or accept manually filed TRAN -1 Form with the appropriate corrections, on or before 30.12.2019. The time limit specified shall be strictly adhered to, so that the petitioner will be able to distribute the accumulated credit to its branches immediately thereafter. Petition disposed off. Petition disposed off.

Summary

Issues:
1. Rejection of request to correct error in Form GST TRAN -1.
2. Inability to provide purchase invoice details.
3. Entitlement to transfer accumulated credit to branches.
4. Interpretation of Rule 117 of CGST Rules.
5. Technical difficulties in transferring credit to GST regime.

Analysis:

1. The petitioner, a bank, sought correction of an error in Form GST TRAN -1 to transfer credit under earlier tax laws to the GST regime. The rejection was based on showing the wrong GSTIN, deemed non-rectifiable. Petitioner's inability to provide purchase invoice details was cited as a reason for rejection.

2. The petitioner argued that the credit availed under the previous regime was undisputed, and returns were accepted. Proposed revising Form GST TRAN-1 to transfer credit to branches if technical issues persisted.

3. Respondents cited Rule 117 of CGST Rules, stating the deadline for filing TRAN-1 Form had passed. Technical limitations in the software for distributing pre-GST credit were highlighted.

4. The court acknowledged the valid credit accumulation pre-GST and accepted returns by the petitioner. Non-availability of purchase invoice details hindered the process. Proposed allowing individual Form GST TRAN-1 for each branch to facilitate credit transfer without invoice details.

5. Referring to a Delhi High Court decision, the court directed the 5th respondent to permit rectified TRAN-1 Form filing electronically or manually with corrections by a specified date. Emphasized adherence to the deadline for immediate credit distribution to branches.

Conclusion:
The court disposed of the Writ Petition by directing the 5th respondent to allow rectified Form GST TRAN-1 filing for each branch by a specified date, ensuring the petitioner's ability to distribute accumulated credit promptly.