2022 (8) TMI 1145 - HC - GST

Distribution and/or utilisation and/or eligibility of Input Service Distributor (ISD) credit of Service Tax/excise duty - Section 140 of the CGST Act 2017 - HELD THAT - The Hon ble Apex Court, to aid the assessees to overcome the procedural / technical hurdles, in UNION OF INDIA ANR. VERSUS FILCO TRADE CENTRE PVT. LTD. ANR. 2022 (7) TMI 1232 - SC ORDER directed the GST Network to open the common portal to file/rectify TRAN-1 and TRAN-2 for a period of two months, i.e., with effect from 1st September, 2022 to 31st October, 2022 to enable the different private parties to avail Transitional Credit. Goods and Service Tax Network (GSTN) is directed to open common portal for filing concerned forms for availing Transitional Credit through TRAN-1 and TRAN-2 for two months i.e. w.e.f. 01.09.2022 to 31.10.2022 - petition disposed off.

Summary

Issues:
Procedural difficulties in distribution/utilization/eligibility of Input Service Distributor (ISD) credit under Section 140 of the CGST Act 2017.

Analysis:
The batch of Petitions concerns the procedural challenges related to the distribution, utilization, and eligibility of Input Service Distributor (ISD) credit under Section 140 of the CGST Act 2017. The Respondents argue that ISD Credit cannot be directly transitioned into the Electronic Credit Ledger (ECL) under the GST Regime. They contend that the ISD credit should have been distributed to different units/offices before 1.07.2017, and the transferee units/offices should have filed TRAN-1 to transition the credit into their respective ECL. However, the Petitioners claim that they faced difficulties in distributing/reporting the credit due to procedural and functional issues with GST forms and the portal.

The Hon'ble Apex Court, in response to the procedural/technical hurdles faced by assessees, directed the GST Network to open a common portal for filing/rectifying TRAN-1 and TRAN-2 for a two-month period starting from 1st September, 2022. This order aimed to assist private parties in availing Transitional Credit. Following this directive, the Petitioners, through their registered units/offices, were allowed to file GST TRAN-1/revised GST TRAN-1 between 01.09.2022 to 31.10.2022. The filing was to be based on manual ISD invoices issued by the ISD of the Petitioner, with the aggregate credit not exceeding the available ISD credit. Additionally, the Central Board of Indirect Taxes and Customs (CBIC) was instructed to issue a clarification within 21 days regarding the distribution/reporting of ISD credit, following the approach outlined by the Hon'ble Supreme Court in a specific case.

Furthermore, the concerned officers were given 90 days to verify the claims for Transitional Credit and make appropriate decisions based on merit after providing a reasonable opportunity to the parties involved. With the consent of the Counsels, the Petitions were disposed of accordingly, providing a structured approach to address the challenges faced by the Petitioners in transitioning ISD credit under the GST regime.