Transitional credit cannot be denied merely because of technical mistake while filing form TRANS 1
Facts and issue of the case
The petitioner was a manufacturer of Grey Woven Fabric. It is submitted that the petitioner purchased Cotton Grey Yarn from various parties in Tamil Nadu and that on the eve of implementation of GST, the petitioner had sufficient stock of raw materials and work-in-progress and therefore, the petitioner attempted to transition the proportionate input tax credit by filing TRAN-1 electronically under Section 140 of TNGST Act, 2017.
It is further submitted that by mistake, the petitioner filled up the details in part 7(d) of TRAN-1 filed under Section 140 of the TNGST Act/CGST Act, 2017 r/w Rules 117 (1), 118, 119 and 120 of the CGST Rules. It is submitted that the petitioner being new to the GST regime, which was implemented only with effect from 01.07.2017, the petitioner committed mistake. It is submitted that instead of giving the details in Part C, the petitioner filled up the details in Part D, as a result of which, the amount which attempted to be transition in TRAN-1 could not be transitioned to the petitioner’s electronic ledger. It is submitted that the petitioner has sent a representation and since the petitioner was unable to elicit any favorable response from the respondents, the petitioner also filed a https://www.mhc.tn.gov.in/judis W.P.(MD) No.7252 of 2020 manual return dated 18.06.2020 with a request to the respondents to allow the petitioner to transition the above credit manually into the electronic ledger of the petitioner.
However Petitioner request was rejected as it was filed beyond the period of limitation .Being aggrieved by such decision preferred a writ petition before High Court
Observation of court
It was observed by court with other similar cases High Court of Gujarat in the case of Jakap Metind Private Limited Vs. Union of India and others reported in (2020) 76 GSTR 220 (Guj), after considering Section 140 of the CGST and the Rules 117 and 120A thereof, was also granted the relief by referring to the decision of the Delhi High Court (M/s.Blue Bird’s case referred supra)Incidentally, similar order came to be passed by this Court in W.P.No. 23107 of 2021 (Vikas Elastochem Agencies Private Limited, represented by its https://www.mhc.tn.gov.in/judis W.P.(MD) No.7252 of 2020 Director, Chennai Vs. The Deputy Commissioner Central Excise and GST, Chennai and another), vide order dated 03.12.2021.
Thus, there is a consistent in all these cases (referred supra) to facilitate the assessee to utilize the credit, which would have been available prior to GST regime. As a matter of fact, the provisions of GST Act also does not provide for lapsing of the credit, which could not be successfully transitioned under the new https://www.mhc.tn.gov.in/judis W.P.(MD) No.7252 of 2020 regime while filing form correctly in TRAN-1. If the credit, which was availed during the regime that existed prior to 01.07.2017, it gives the indefeasible right to utilize such credit, even to those assessees, who were not under the taxable regime under the old Act, have been allowed to transition credit, as they were liable to pay tax
The Hon’ble Supreme Court in the case of Collector of Central Excise, Pune and others V Dai Ichi Karkaria Limited and others reported in (1999) 7 SCC 448, has held that the credit availed under the provisions of the erstwhile Central Excise Act and Central Excise Rules, 1944 are indefeasible and are intended to reduce the cascading effect of the tax to benefit the consumers.
Thus, I am inclined to allow this writ petition subject to the condition that the credit, which was sought to be transitioned by the petitioner by filing a defective Form in GST TRAN-1 contains the correct details.
Conclusion
The court held that under this circumstances the respondents to allow the input tax credit, after a scrutiny and verification by a competent officer that such credit https://www.mhc.tn.gov.in/judis W.P.(MD) No.7252 of 2020 could be transitioned but for wrong declaration in Form TRAN-1. The concerned jurisdictional officer is directed to examine the records and then come to an independent conclusion as to whether the petitioner was indeed entitled to transition credit by filing TRAN-1, in terms of Section 140 of the said Act r/w the Rules thereof but from the technical mistakes committed by the petitioner. If the credit was available to be transitioned, it cannot be denied. The respondents shall thereafter either allow the petitioner to file either a revised TRAN-1 or directly make a credit entry in the electronic cash register of the petitioner. The petitioner is also directed to cooperate with the respondents by producing all the required documents to substantiate that the petitioner was indeed entitled to transition the credit within a period of 2 months from the date of receipt of a copy of this order. The entire exercise shall be completed within a period of 3 months from the date of receipt ofa copy of this order.
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