TRANS 1 – BOTTLENECKS

[CA Akash Phophalia]

In view of provisions of section 140 of CGST act 2017 and rules made there under the assessee was allowed to carry forward its accumulated credit of Excise/Service Tax/VAT by way of filing TRANS-1 declaration form by 27/12/2017. However, due to technical glitches on GSTN, several assessees were unable to fill the same. 

In the case of SHATABDI SWITCHGEARS AND CONTROLS PVT. LTD. VERSUS UNION OF INDIA & ORS. [2019 (11) TMI 1252 - DELHI HIGH COURT] it was submitted by the assessee that it had made several attempts to upload its claim for transition of credit in form GST TRAN-1, but was unsuccessful on account of technical glitches on the common portal. On Inquiry from other professionals, the assessee came to know that even on the last date, i.e., 27/12/2017, the system was repeatedly showing errors and therefore, a large number of assesses had been unable to upload the claim for transition of credit in Form TRAN-1. The assessee submitted a representation to department requesting them to “feed the amount of credit at backend through your system”. Further, as a large number of assesses were unable to file their claim of transitional input credit by 27/12/2017 due to glitches in the system, the due date for filing TRAN-1 was extended vide Circular No. 39/13/2018-GST dated 03/04/2018. However, the result remained unchanged.

In the cases AMAN MOTORS VERSUS UNION OF INDIA & ORS. [2019 (11) TMI 1249 - DELHI HIGH COURT] and AAGMAN SERVICES PRIVATE LIMITED VERSUS UNION OF INDIA & ORS. [2019 (11) TMI 1248 - DELHI HIGH COURT] the assessee tried filing Form TRAN-1 on the common portal on 23/08/2017, however, the TRAN-1 was not processed and error messages were displayed by the system. 

In the above cases citing the landmark ruling as held in the case of M/s Blue Bird Pure Pvt Ltd Union of India Ors, [2019 (7) TMI 1102 - DELHI HIGH COURT] in this regard the Court directed the department to either open the online portal or to enable the assessee to file the rectified TRAN-1 electronically or accept the same manually.

The relevant portion of the said decision is reproduced hereunder :-

“10. Having carefully examined those decisions, the Court is unable to find any distinguishing feature that should deny the Petitioner a relief similar to the one granted in those cases. In those cases also, there was some errors committed by the Petitioners which they were unable to rectify in the TRAN-1 Form and as a result of which, they could not file the returns in TRAN-2 Form and avail of the credit which they were entitled to. In both the said decisions, the Court noticed that GST system is still in the ‘trail and error phase’ insofar as its implementation is concerned. It was observed in Bhargava Motors (Supra) as under :

10. The GST system is still in a ‘trail and error phase’ as far as its implementation is concerned. Ever since the date the GSTN became operational, this Court has been approached by dealers facing genuine difficulties in filing returns, claiming input tax credit through the GST portal. The Court’s attention has been drawn to a decision of the Madurai Bench of the Madras High Court dated 10^th September, 2018 in W.P. (MD) No. 18532/2018 (Tara Exports vs. Union of India 2018 (9) TMI 1474 - MADRAS HIGH COURT) where after acknowledging the procedural difficulties in claiming input tax credit in the TRAN-1 form that Court directed the respondents “either to open the portal, so as to enable the petitioner to file the TRAN-1 electronically for claiming the transitional credit or accept the manually filed TRAN-1” and to allow the input credit claimed “after processing the same, if it is otherwise eligible in law”.

11. In the present case also the Court is satisfied that the Petitioner’s difficulty in filling up a correct credit amount in the TRAN-1 from is a genuine one which should not preclude him from having its claim examined by the authorities in accordance with law. A directional is accordingly issued to the Respondents to either open the portal so as to enable the Petitioner to again file TRAN-1 electronically or to accept a manually filed TRAN-1 on or before 31^st May, 2019. The Petitioner’s claims will thereafter be processed in accordance with law.

 12. In the present case, the Court is satisfied that, although the failure was on the part of Petitioner to fill up the data concerning its stock in Column 7(d) of TRAN-1 instead of Column 7(a), the error was inadvertent. The Respondents ought to have provided in the system itself a facility for rectification of such errors which are clearly bona fide. It should be noted at this stage that although the system provided for revision of a return, the deadline for making the revision coincided with the last date of filing the return i.e. 27^th December, 2017. Thus, such facility was rendered impractical and meaningless.”

The decisions in M/s Blue Bird Pure Pvt. Ltd (supra) has also been followed in M/s Aadinath Industries & Anr v. Union of India, W.P. (C) 9775/2019, decided on 20/09/2019 [2019 (10) TMI 91 - DELHI HIGH COURT]; Lease Plan India Private Limited v. Government of National Capital Territory of Delhi and Ors, W.P.(C) 3309/2019, Decided on 13/09/2019 [2019 (9) TMI 1044 - DELHI HIGH COURT]; Godrej & BoyceMfg. Co Ltd through its branch connected manager v/s Union of India W.P. (C) 8075/2019, decided on 15/10/2019 [2019 (10) TMI 1084 - DELHI HIGH COURT].

hence, where assessees are facing similar situations and could not availed of transition credit due to technical glitches of GSTN they can approach to the Jurisdictional High Court to avail of the said credit.      

CA Akash Phophalia

9799569294