Guidelines for verifying the Transitional Credit in light of the order of the Hon'ble Supreme Court in the Union of India vs. Filco Trade Centre Pvt. Ltd., SLP(C) No. 32709- 32710/2018, order dated 22.07.2022 & 02.09.2022 - GST - States - 19/2022-TNGST

GOVERNMENT OF TAMIL NADU COMMERCIAL TAXES DEPARTMENT OFFICE OF THE COMMISSIONER OF COMMERCIAL TAXES EZHILAGAM, CHENNAI- 600 005 Circular No. 19/2022-TNGST (PP6/GST/ 145 /2022) Date: 14.12.2022 Subject: TNGST Act, 2017 - Guidelines for verifying the Transitional Credit in light of the order of the Hon ble Supreme Court in the Union of India vs. Filco Trade Centre Pvt. Ltd., SLP(C) No. 32709- 32710/2018, order dated 22.07.2022 02.09.2022 -reg. In the reference first cited, guidelines for filing / revising TRAN-1 / TRAN-2 in terms of order dated 22/07/2022 and 02/09/2022 of the Hon ble Supreme Court of India in the case of Union of India Vs. Filco Trade Centre Private Limited was issued. 2.1. On the recommendation of the GST Council, the following guidelines for verification of the Transitional Credit by jurisdictional proper officer in a time bound manner in accordance with the directions issued by Hon ble Supreme Court vide order dated 22.07.2022 in the matter of Union of India vs. Filco Trade Centre Pvt. Ltd., SLP(C) No. 32709-32710/2018 are issued as under. The operative portion of the judgment is as follows: 1. 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. 2. Considering the judgments of the High Courts on the then prevailing peculiar circumstances, any aggrieved registered assessee is directed to file the relevant form or revise the already filed form irrespective of whether the taxpayer has filed writ petition before the High Court or whether the case of the taxpayer has been decided by Information Technology Grievance Redressa/ Committee (ITGRC). 3. GSTN has to ensure that there are no technical glitch during the said time. 4. The concerned officers are given 90 days thereafter to verify the veracity of the claim/transitiona/ credit and pass appropriate orders thereon on merits after granting appropriate reasonable opportunity to the parties concerned. 5. Thereafter, the allowed Transitional credit is to be reflected in the Electronic Credit Ledger. 6. If required GST Council may also issue appropriate guidelines to the field formations in scrutinizing the claims. The Special Leave Petitions are disposed of accordingly. Pending applications, if any, also stand disposed of. 2.2. Subsequently in Miscellaneous Application No. 1545-1546/2022 in SLP(C) No. 32709-32710/2018, Hon ble Supreme Court vide order dated 2nd September, 2022 has inter-alia ordered as follows: The time for opening the GST Common Portal is extended for a further period of four weeks from today. It is clarified that al/ questions of law decided by the respective High Courts concerning Section 140 of the Central Goods and Service Tax Act, 2017 read with the corresponding Rule/Notification or direction are kept open. 3. As is clear from the above, the Hon ble Court has directed that the common portal be opened for filing prescribed forms for availing Transitional Credit through TRAN-1 and TRAN-2 for two months from 01.10.2022 to 30.11.2022 for the aggrieved registered asseesee (henceforth, referred as applicant ). The Transitional Credit claimed by the applicant shall be credited in his electronic credit ledger to the extent allowed by the jurisdictional tax officer through an order after carrying out necessary verifications. As per the Hon ble Court s order, the said verification has to be carried out within 90 days after completion of the above window of two months, i.e. within 90 days from 01.12.2022 i.e, upto 28.02.2023 . 2.1 It is to be noted that while allowing the applicant to file/revise TRAN-1 / TRAN-2 during this window of 2 months, Hon ble Supreme Court has kept all questions of law open. 2.2 It may be mentioned that Hon ble Supreme Court has only allowed filing of TRAN-1/TRAN-2 or revising the TRAN-1 / TRAN-2 already filed by the applicant and has not allowed the applicant to file revised returns under the existing laws. 3. Reference is also invited to the Commissioner of State Tax Circular No. 15/2022 -TNGST (PP6/145/2022) read in the reference first cited, wherein guidelines have been issued to the applicants for filing new TRAN-1 / TRAN-2 or revising the already filed TRAN-1 / TRAN-2 on the common portal. 4. To ensure uniformity in the implementation of the directions of the Hon ble Supreme Court, across field offices, the Commissioner, in exercise of powers conferred by section 168 of the Tamil Nadu Goods and Services Tax Act, 2017 (hereinafter referred to as TNGST Act ), hereby issues the following guidelines for verifying the Transitional Credit: 5. Verification of the Transitional Credit 5.1 The jurisdictional proper officers can access the TRAN-1 / TRAN-2 filed/revised by the applicant on their back office systems. Further, a self-certified downloaded copy of TRAN-1 / TRAN-2 filed/revised by the applicant shall also be made available to the jurisdictional proper officer by the said applicant as mentioned in Para 4.5 of Circular read in the reference first cited. 5.2 The verification of the transitional credit shall be conducted by the jurisdictional proper officer who will pass an appropriate order regarding the veracity of the claim filed by the applicant, based on all the facts and the provisions of the law. In respect of TRAN-1 / TRAN-2 filed/revised by the applicant under the administrative control of the state tax authorities, such verification and issuance of order shall be done by the jurisdictional officer of state tax, whereas in respect of TRAN-1 / TRAN-2 filed/revised by the applicant under the administrative control of the central tax authorities, the same shall be done by the jurisdictional officer of central tax. The jurisdictional tax officer shall start the verification process immediately on availability of TRAN-1 / TRAN-2 filed/revised by the applicant on the back office system or on receipt of self-certified downloaded copy of the same from the applicant, whichever is earlier. It is needless to mention that principles of natural justice shall be followed in the process of passing the order relating to allowance or disallowance of the Transitional Credit. 5.3 The jurisdictional proper officer, shall on the basis of declaration made by the applicant in the format specified in Annexure A to Circular read in the reference first cited, and on the basis of data available on the back office system, shall check whether the applicant had earlier filed TRAN-1/ TRAN-2 or not. In cases, where TRAN-1 / TRAN-2 had already been filed by the applicant earlier, the proper officer shall check whether there is any change from the earlier filed TRAN-1 / TRAN-2 or not. In case, there is no such change from the earlier filed TRAN-1/ TRAN-2, then such claim of transitional credit is liable for rejection by the tax officer, through a reasoned order, after providing due reasonable opportunity to the applicant. 5.3.1 In other cases, the jurisdictional proper officer shall proceed for verification of claim of transitional credit made by the applicant in FORM TRAN-1 / TRAN-2. In this regard, in respect of transitional credit pertaining to State Tax, he / she may refer to the guidelines detailed in Annexure I to this circular. In respect of verification of transitional credit pertaining to the Central Tax, the Jurisdictional Proper Officer may refer to the guidelines issued by the CBIC read in the reference second cited. 5.3.2 There may be cases where the transitional credit claim filed/revised by the applicant may have components of both Central tax and State tax. In such cases, where the applicant is under the jurisdiction of state tax authority and where the transitional credit claimed has component of central tax also, the jurisdictional state tax authority shall refer the said claim for verification of component of central tax to his counterpart central tax authority. For this purpose, he shall share the list of GSTINs/ARNs with the counterpart officer, in respect of which verification report is needed from him, on a weekly basis, along with an intimation of the same to the nodal officer of state tax as well as central tax referred in Para 6.1 below through his official email ID or physically. Similar action, as above, shall also be taken by the jurisdictional central tax officers in cases where the applicant is under the jurisdiction of central tax authority and where the transitional credit claimed has component of state tax also. 5.3.3 The jurisdictional proper officer shall, in parallel, continue the verification of the remaining portion of the transitional credit at his end. 5.3.4 The jurisdictional proper officer and the counterpart tax officer shall verify the transitional credit claimed under the SGST or the CGST head, as the case may be, by referring to the guidelines detailed in Annexure I to this circular for transitional credit pertaining to state tax and the guidelines issued by the CBIC for verification of transitional credit pertaining to the Central Tax, as applicable. While conducting the verification, the proper officer must also check whether any adjudication or appeal proceedings in TRAN-1 / TRAN-2 related matter are pending / concluded against the applicant. In such cases, where any adjudication or appellate proceedings have been initiated against the applicant in respect of TRAN-I / TRAN-2, the proper officer should take a note of the relevant facts in the notice / order, and the grounds / reasons for inadmissibility of transitional credit, if any, in the said notice / order. 5.3.5 In respect of verification done by the counterpart officer, after verification, he/she will prepare a verification report, in the format detailed in Annexure-Il of this circular, specifying the amount of transitional credit which may be allowed to be credited to the electronic credit ledger of the applicant and the amount which is liable for rejection, along with the detailed reasons / grounds on which the said amount is liable to be rejected. Such duly signed verification report shall be sent by the counterpart officer to the jurisdictional proper officer at the earliest, though generally not later than ten days from the date of receipt of the request from the counterpart officer. In case, where the adjudication or appeal proceedings in respect of TRAN-1 / TRAN-2 related matter are pending/ concluded against the applicant, the counterpart officer shall categorically bring out the relevant facts in his/her verification report along with his detailed findings, admissibility / inadmissibility, reasons of inadmissibility thereof and the copy of the relevant notice and/or orders. 5.3.6 For the purpose of verification of the claim of the transitional credit, the jurisdictional proper officer as well as the counterpart tax officer, if required, may call for relevant records including requisite documents / returns / invoices, as the case may be, from the applicant. 5.3.7 After receiving the verification report from the counterpart officer, the jurisdictional proper officer shall decide upon the admissibility of the credit claimed by the applicant. In case the jurisdictional proper officer finds that the transitional credit claimed by the applicant is partly or wholly inadmissible as per the provisions of the Act and the rules thereof, then a notice shall be issued by the jurisdictional proper officer to the applicant preferably within a period of seven days from the receipt of report from the counterpart officer, seeking explanation of the applicant as to why the said credit claimed by him should not be denied wholly / partly, as the case may be. The applicant shall also be provided an opportunity of personal hearing by the jurisdictional proper officer in such cases. If required, the jurisdictional proper officer may seek comments of the counterpart officer on the submissions made by the applicant in so far as the said submission relates to the tax (central or State) being administered by such counterpart officer. 5.3.8 After considering the facts of the case, including verification report received from the counterpart officer, submissions made by the applicant and the comments, if any, of the counterpart officer on the same, the jurisdictional proper officer shall proceed to pass a reasoned order, preferably within a period of fifteen days from the date of personal hearing, specifying the amount of transitional credit allowed to be transferred to the electronic credit ledger of the applicant and upload a pdf copy of the said order, on the common portal for crediting the amount of allowed transitional credit to the electronic credit ledger of the applicant. In any case, such order shall be passed within a period of 90 days from 01.12.2022 i.e. upto 28.02.2023. 5.3.9 Where the amount credited to the electronic credit ledger pursuant to the originally filed TRAN-1 / TRAN-2 exceeds the amount of credit admissible in terms of the revised TRAN-1 / TRAN-2 filed by the applicant, such excess credit is liable to be demanded and recovered from the applicant, along with interest and penalty, in accordance with the provisions of Chapter XV of the Act and the rules made thereunder. 5.3.10 GSTN will also issue a separate advisory for entering the details on the portal by the tax officers. 6. Modalities of coordination between central tax authorities and state tax authorities 6.1 The Territorial Personal Assistant to Joint Commissioner (ST) of each divisions and Personal Assistant to Joint Commissioner (LTU) Chennai are nominated as nodal officer for proper co-ordination with central authorities for verification of transitional credit claims and shall make available the details of the nodal officer, along with their phone numbers and email IDs, to the counterpart tax authority. The nodal officers shall ensure that the verification reports / comments sought by the jurisdictional proper officers are being sent in a timely manner by the counterpart officers in their Divisions. 6.2 It is the responsibility of the Joint Commissioners (Territorial) and Joint Commissioner (LTU) to regularly monitor the progress made in this regard so that the timelines mentioned in the Hon ble Supreme Court s order dated 22.07.2022 and 02.09.2022 are strictly adhered to by the field offices. 7. Where any communication is required to be made by the State Jurisdictional proper officer with the applicant for the purpose of verification of TRAN-1/ TRAN-2, , the same should be made through the portal. Sd/- Dheeraj Kumar Principal Secretary/ Commissioner of State Tax