2021 (6) TMI 10 - HC - GST

Filing form GST TRAN-1 - transitional credit of CENVAT credit - HELD THAT - Situation similar to the one faced by the present Petitioner has already been considered by this Court in the case of M/S. BLUE BIRD PURE PVT. LTD. VERSUS UNION OF INDIA ORS. 2019 (7) TMI 1102 - DELHI HIGH COURT . In the said case as well, the Petitioner had committed an inadvertent error in showing available stock of goods as on 30th June, 2017 in Column 7(d) instead of 7(a) of the TRAN-1 Form. Noting and relying upon the judgments of this Court in BHARGAVA MOTORS VERSUS UNION OF INDIA ORS. 2019 (5) TMI 899 - DELHI HIGH COURT and KUSUM ENTERPRISES PVT. LTD., SANKO GOSEI TECHNOLOGY INDIA PVT. LTD. VERSUS UNION OF INDIA ORS. 2019 (7) TMI 945 - DELHI HIGH COURT , the Court had directed the Respondents to enable the Petitioner to rectify TRAN-1 Form. On 4th January, 2018, when the Petitioner attempted to load TRAN-2 Form, no time had been specified under the Rules, which could be deemed to be mandatory. The time period was introduced on 7th March, 2018 through Notification No. 12/2018-CT. By virtue of this notification, in terms of Rule 117(4)(iii)(b), the time period was specified to be up to 31st March, 2018. Thus, even if the retrospective amendment to Section 140, (introduced through Section 128 of the Finance Act, 2020) is taken into consideration, there cannot be any denying the fact that on the date when the Petitioner made an attempt, no time period had been specified. The Respondents are directed to either open the online portal so as to enable the Petitioner to file the rectified TRAN-1 Form electronically, or accept the same manually with necessary corrections, on or before 30th June, 2021 - petition allowed.

Summary

Issues:
1. Claim of transitional input tax credit under GST laws.
2. Inability to file TRAN-2 Form due to errors in filing TRAN-1 Form.
3. Judicial interpretation of rules regarding transitional credit claims.
4. Adequacy of time period for filing transitional credit forms.

Issue 1: Claim of transitional input tax credit under GST laws:
The petitioner, a trading company, migrated to the GST regime with a closing stock of finished goods. They filed the statutory TRAN-1 Form to claim transitional input tax credit (ITC) under the CGST Act. Subsequently, they attempted to file the TRAN-2 Form to claim further ITC but faced obstacles due to errors in the initial filing process. Despite efforts to rectify the situation, the system did not allow for corrections, leading to a dispute over the transitional credit claim.

Issue 2: Inability to file TRAN-2 Form due to errors in filing TRAN-1 Form:
The petitioner encountered difficulties in filing the TRAN-2 Form to claim transitional credit on their stock due to inadvertent errors in the initial filing of the TRAN-1 Form. The system restrictions prevented them from rectifying the mistakes, leading to a situation where they were unable to avail the transitional credit they were entitled to under the law.

Issue 3: Judicial interpretation of rules regarding transitional credit claims:
The court considered previous judgments where inadvertent errors in filing details for transitional credit claims were rectified to ensure that taxpayers were not unduly penalized for genuine mistakes. The court emphasized that procedural lapses, such as missing details in the initial form, should not impede a taxpayer's right to claim transitional ITC if they are otherwise eligible. The court highlighted the challenges faced by taxpayers in navigating the GST system and acknowledged the need for flexibility in addressing such issues.

Issue 4: Adequacy of time period for filing transitional credit forms:
The court noted that the petitioner was not provided with a sufficient time period to upload data in the TRAN-2 Form. The absence of a specified time period at the time of the petitioner's attempt, coupled with subsequent retrospective amendments, raised concerns about the fairness of denying the petitioner the opportunity to rectify their filing errors. The court directed the respondents to allow the petitioner to rectify the TRAN-1 Form and subsequently file the TRAN-2 Form within a specified deadline to address the procedural lapses effectively.
This detailed analysis of the judgment highlights the key issues addressed by the court regarding the transitional credit claims under the GST laws and the challenges faced by taxpayers in navigating the system. The court's emphasis on rectifying genuine errors and ensuring procedural fairness underscores the importance of upholding taxpayer rights within the framework of the law.