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TMI BlogGuidelines for verifying the Transitional Credit in light of the order of the honourable Supreme Court in the Union of India v. Filco Trade Centre Pvt. Ltd., SLP(C) Nos. 32709-32710/2018, order dated July 22, 2022 and September 2, 2022X X X X Extracts X X X X X X X X Extracts X X X X ..... ing made applicable, mutatis mutandis, in implementation of the Goa GST Act, 2017, expect the Annexure-1 which pertains to verification CGST Credit and below mentioned administrative instruction. Copy of the referred CBIC Circular is attached herewith. It is further decided that Deputy Commissioner (GST) shall be the Nodal Officer for proper co-ordination between State and Central authorities for verification of transitional credit claims. Also, it is the responsibility of the Deputy Commissioner of State Tax of concerned ward offices to regularly monitor the progress made in this regard so that the time lines mentioned in the honourable Supreme Court s order dated July 22, 2022 and September 2, 2022 are strictly adhered to by the field formations. Difficulty, if any, in implementation of this Circular may please be brought to the notice of the undersigned. Commissioner of State Taxes, Panaji. Circular No. 182/14/2022-GST F. No. CBIC-20021/04/2021-GST Government of India Ministry of Finance Department of Revenue Central Board of Indirect Taxes and Customs GST Policy Wing **** New Delhi, Dated the 10th of November, 2022 To, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the corresponding Rule/Notification or direction are kept open. 2. 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 assessee (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. up to 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 re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on made by the applicant in the format specified in Annexure A to Circular no. 180/12/2022 dated 09.09.2022, 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 tax officer shall check whether there is any change from the earlier filed TRAN-1/TRAN-2 or not. In case, there is no 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 tax 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 central tax, he may refer to the guidelines detailed in Annexure I to this circular. In respect of verification of transitional credit pertaining to the State Tax/Union territory Tax, the tax officer may refer to the guidelines issued by the relevant state/UT, if any. 5.3.2 There may be cases where the t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ctronic credit ledger of the applicant and the amount which is liable for rejection, along with 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 tax officer at the earliest, though generally not later than ten days from the date of receipt of the request from the jurisdictional 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 tax 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 tax ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Daman and Diu, the taxpayers of UT of Ladakh and the earlier UT of Daman and Diu have been allotted new GSTINs. Accordingly, the taxpayers of Ladakh and Daman and Diu can file/ revise TRAN-1/TRAN-2 only through their newly allotted GSTINs. It is, therefore, advised that the concerned jurisdictional tax officers should take into consideration transitional credit, if any, claimed by such taxpayers under their previous GSTINs. 6. Modalities of coordination between central tax authorities and state tax authorities 6.1 It is to be noted that all the Zonal Principal Chief Commissioner/ Chief Commissioners (PCCs/CCs) of Central Tax and Chief Commissioners/ Commissioners of Commercial Taxes (CCCTs/CCTs) of various states/UTs shall appoint nodal officer(s) in their respective formations immediately for proper co-ordination between central and state/UT authorities for verification of transitional credit claims and shall make available the details of the said nodal officers, 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 tax officers are being sent in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ough ER or ST return and now intend to avail remaining credit in respect of capital goods which has not been availed through the ER or ST return . The said amount of credit should have been admissible as input tax credit under GST law as well as under existing law. 3. Table 7(a) Column (6) in Entry 7A in Table 7(a) 140(3), 140(4)(b), 140(6) and 140(7) This table pertains to credit claim by new taxpayers or taxpayers who were either not registered or were not part of CENVAT Credit chain earlier. Here, Credit can be claimed in TRAN-1 in respect of inputs held in stock and inputs contained in semifinished or finished goods held in stock on the appointed day based on invoice/ document evidencing payment of duty (including CTD), subject to fulfillment of other conditions specified in section 140(3), 140(4)(b), 140(6) and 140(7) as the case may be. Column (6) in Entry 7B in Table 7(a) Proviso to Section 140 (3) and Rule 117(4) of CGST Rules This table pertains to credit claim by new taxpayers (e.g. traders) wh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... .1.1 Check 1: Verify that the credit has been taken against closing balance of CENVAT credit in ER-1/2/3 or ST-3. Credit can be taken only where the last return was filed and credit taken in Table 5(a) should not be more than closing balance of credit in ER-1/2/3 or ST-3 minus the education / secondary education cess / KKC/ SBC. 3.1.2 Check 2: Credit of taxes not covered in the definition of eligible duties in section 140 cannot be availed. Example: Krishi Kalyan Cess, Education Cess, clean energy cess etc. Credit of VAT and PLA balance is not allowed as transitional credit. 3.1.3 Check 3: Check that returns have been filed for last 6 months. An assessee filing TRAN-1 and taking credit in table 5(a) should have - a) Filed ER-1 or ER-2 regularly between Jan, 2017 and June, 2017 or b ) Filed ER-3 for period ending March, 2017 and June, 2017 or c) Filed ST-3 for period ending March, 2017 and June, 2017. This check should be performed liberally where many units have merged into one registration or a single unit has been split into many (Centralized registration cases / LUT units) in GST. Compliance by any of the merging unit which was filing the returns in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ould flow from the return in such cases. It should be checked that the return reflects credit after application of rule 6(3) of CENVAT Credit Rules. The reversal in terms of rule 6(3) was required to be done at the time of removal of finished goods. Therefore some credit in Table 7A can arise for such inputs which were in stock and which not attributed till the date of the transition to either exempted goods or non- exempted goods. To avail credit on such inputs, other conditions prescribed in cl (i) to (v) of section 140(3) are required to be satisfied. Where the stock shown is very high, verification using VAT return or any other collateral document, where stocks were declared, can be done. 5.2 : Check 6: In cases where a new taxpayer has availed credit using Credit Transfer Document, check that CTD issued by the manufacturer exists and CTD has been issued in terms of rule 15(2) of CCR, 2017 read with notification no. 21/2017-CE (NT) dated 30.06.2017 (Capital Goods having value more than Rs. 25,000, goods to be identifiable by a distinct number etc.) e.g.: Dealers of new car. Checks for Table 7(a), Entry 7B: 6.1 Check 7 : Check that credits on stock declared on whic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 11.2 Clarifications issued vide circular no. 33/07/2018-GST dated 23.02.2018 regarding disputed credit and blocked credit may be followed during the verification process of the transitional credit. ANNEXURE-II VERIFICATION REPORT FOR TRAN-1/TRAN-2 TO BE SUBMITTED BY THE COUNTERPART OFFICER TO THE JURISDICTIONAL TAX OFFICER 1. Basic information: (a) Name (b) GSTIN (d) Whether transition credit claimed earlier Yes/ No 2. (a) Whether SCN/Adjudication order issued in respect of credit availed through TRAN- 1/TRAN-2 filed earlier; if Yes , provide reference number and date: (b) If answer to (a) above is Yes , then amount of transitional credit disallowed/proposed to be disallowed out of total claim filed by the applicant earlier: * Table of TRAN- 1/TRAN-2 # Amount of credit disallowed/ proposed to be disallowed @ Grounds on which credit is disallowed/ proposed to be disallowed $ Whether recovered ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Amount inadmissible, if any Grounds of inadmissibility, along with the relevant provisions of law/ rules CGST SGST/ UTGST CGST SGST/ UTGST CGST SGST/ UTGST (a) 5(a) of TRAN -1 (b) 5(c) of TRAN-1 (c) 6(a) of TRAN-1 (d) 6(b) of TRAN-1 (e) 7(a)(7A) of TRAN- 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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