2022 (11) TMI 944 - HC - GST

Distribution and eligibility of Input Service Distributor (ISD) credit of Service Tax under Section 140 of the CGST Act 2017 - procedural and functional difficulties in relation to the GST forms and portal - HELD THAT - The Hon ble Apex Court, to aid the assessees to overcome the procedural/technical hurdles in Union of India Another V/s. Filco Trade Centre Pvt. Ltd. Another 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. Petitioner, through its respective units/offices registered under CGST Act and/or State Acts, as the case may be, can avail this window and file GST TRAN-1/revised GST TRAN-1 at the units/offices in terms of the Hon ble Supreme Court s order in Filco Trade - GST TRAN-1/revised GST TRAN-1 filed by the units/offices will be basis the manual ISD invoices issued/to be issued by ISD of petitioner subject to aggregate credit cumulatively not exceeding the ISD credit available with petitioner of Rs.13,43,92,019/- as stated by petitioner in its petition - Petition disposed off.

Summary

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

Analysis:
The petitioner faced challenges in distributing credit transitioned to their units due to procedural and functional difficulties with GST forms and portal. The respondent objected, stating that migrating ISD registration to the GST regime and transitioning credit is prohibited under the CGST Act. They argued that ISD registration under GST does not have the same status as a regular assessee, making it ineligible for Input Tax Credit (ITC) under Section 16. The respondent also highlighted errors in comparing ISD with normal Service Tax, citing provisions of Section 140 and Rule 39 of the CGST Rules.

In previous related cases, the Bombay High Court granted reliefs to petitioners facing similar transition and distribution issues concerning ISD credit. Additionally, the Supreme Court directed the GST Network to open a common portal for filing and rectifying forms to avail Transitional Credit, providing a window from September 1, 2022, to October 31, 2022. The court emphasized the importance of addressing technical glitches and verifying claims within 90 days.

In alignment with the Supreme Court's directives, the High Court adopted a similar approach for the present petition. The petitioner's units/offices were allowed to file GST TRAN-1/revised GST TRAN-1 based on manual ISD invoices, with a cumulative credit limit. The Central Board of Indirect Taxes and Customs (CBIC) issued a clarification regarding ISD credit distribution/reporting to address the challenges faced by parties. The concerned officers were given 90 days to verify claims and pass appropriate orders.

Ultimately, the petition was disposed of, providing a framework for the petitioner to address the procedural difficulties and eligibility issues related to ISD credit distribution under the CGST Act 2017.