2023 (9) TMI 130 - HC - GST

Rectification on GSTR Tran-1 whereby transitional credit was wrongly claimed - Input Tax Credit lying unutilized - Section 140 of Central Goods and Services Tax (CGST) Act, 2017 - HELD THAT - The petitioner is responsible for the mistake committed by him in filing TRAN-1 on 24.08.2017. However, the fact remains that the aforesaid amount had remained unutilized as per the monthly returns filed by the petitioner for the month of June-17, which was the last return filed under the TNVAT Act, 2006 before the enactment of the respective GST Acts with effect from 01.07.2017. The amount was also not disputed by the respondents when the first return was filed by the petitioner on 24.08.2017. The Hon'ble Supreme Court in COLLECTOR OF CENTRAL EXCISE, PUNE VERSUS DAI ICHI KARKARIA LTD. 1999 (8) TMI 920 - SUPREME COURT , has held that the credit that was validly availed and cannot be denied. The Court is inclined to quash the impugned order and remits the case back to the respondents to re-examine the records of the petitioner afresh from the last VAT return for the month of June 2017 under the TNVAT Act, 2006 - petition allowed.

Summary

Issues Involved:
Challenge to disallowance of transitional credit under CGST Act, 2017.

The petitioner, previously an assessee under TNVAT Act, 2006, filed FORM TRAN-1 under Section 140 of the CGST Act, 2017 to transmit unutilized Input Tax Credit as of 30.06.2017. The petitioner declared the carried forward Input Tax Credit as Rs. 89,88,498/- in the returns for June 2017.

In the revised FORM GST TRAN-1 filed on 24.08.2017, the petitioner transited the Input Tax Credit in table 5(c) for State/Union Territory tax credit carried forward. This credit was utilized by the petitioner to discharge tax liability under the TNGST Act, 2017.

After a Supreme Court decision, the petitioner filed a revised return on 28.11.2022 to rectify errors due to technical glitches in the web portal. However, a mistake was made in filing the revised TRAN-1, placing the credit amount in the wrong table.

The respondents disallowed the transitional credit claimed by the petitioner, stating that the credit was wrongly transited and utilized. A Show Cause Notice was issued to recover Rs. 89,88,499/- if not paid voluntarily.

The petitioner argued that although mistakes were made in filing the returns, the unutilized credit as of June 2017 should not be denied. The Supreme Court precedent supports the view that validly availed credit cannot be denied.

The Court held that the unutilized credit from the last VAT return under TNVAT Act, 2006 should be re-examined by the respondents. If the credit was available, even with filing discrepancies, it should be condoned and regularized. If no credit was available, it should be recovered in accordance with the law within four weeks.

The Writ Petition was allowed with the above observations, with no costs imposed.