2019 (12) TMI 1084 - HC - GST

Court permits revision of forms, upholds tax credits, emphasizes electronic filing for efficiency and verification.

The court allowed the writ petition, directing the respondents to permit the petitioner to revise the forms electronically or manually by a specified ... Transition of input tax credit on migration to GST under Sections 139-143 and Rule 117 - effect of technical/system errors on compliance with procedural cut-off for filing GST TRAN-1 - entitlement to carry forward accrued input tax credit despite failure to upload TRAN-1 by prescribed cut-off where attempt to log-in is recorded - authority to verify genuineness of transitional credit claimsTransition of input tax credit on migration to GST under Sections 139-143 and Rule 117 - effect of technical/system errors on compliance with procedural cut-off for filing GST TRAN-1 - entitlement to carry forward accrued input tax credit despite failure to upload TRAN-1 by prescribed cut-off where attempt to log-in is recorded - authority to verify genuineness of transitional credit claims - Assessee who attempted to upload TRAN-1 before the cut-off but could not complete filing due to system-related difficulties is not to be denied the substantive right to carry forward input tax credit solely for non-compliance with the procedural cut-off. - HELD THAT: - The court found it is not disputed that the petitioner made attempts to upload the TRAN-1 particulars into the respondents' GST portal on or before the prescribed cut-off date and that system logs record such attempts. Given that inability to complete filing cannot be conclusively attributed to the assessee where the system records an attempted log-in, denying the substantive right to carry forward accrued input tax credit solely on that ground would be impermissible. The court noted earlier High Court decisions addressing similar difficulties during the GST implementation phase and relied on the principle that transitional tax credits should not be defeated by procedural lapses arising from systemic problems. The respondents retain the statutory power to verify the genuineness of the claims; the court's direction to permit filing is without prejudice to such verification. The petitioner was therefore permitted to revise or file the TRAN-1 electronically or, if electronic filing is not feasible, manually, subject to verification by the authorities, by the extended date specified by the court.Impugned communications denying transfer of transitional credit quashed and respondents directed to permit revision or filing of TRAN-1 electronically or manually by the specified extended date, without denial solely for missing the original cut-off and subject to verification of genuineness.Final Conclusion: Writ petition allowed: petitioner permitted to revise/file TRAN-1 on or before the extended date specified by the court; respondents may verify the genuineness of the claim but cannot deny the accrued input tax credit merely for non-submission before the original cut-off where an attempt to upload is recorded. Issues:Transfer of tax credit from VAT regime to GST regime due to technical glitch in system resulting in denial of benefit to the petitioner.Analysis:The petitioner, an assessee under the Kerala Value Added Tax Act, migrated to the GST regime but faced a technical glitch while trying to carry forward tax credit from the VAT regime to the GST regime. The transition provisions governing the transfer of credit are Sections 139 to 143 of the CGST/SGST Act and Rule 117 of the SGST Rules. The petitioner had to file a declaration in Form GST TRAN-1 by 27.12.2017, which he attempted but failed due to a technical glitch. The respondents denied the transfer of credit citing non-compliance with procedural requirements before the cut-off date. The petitioner contended that his substantial rights under the GST Act should not be denied due to a technical lapse caused by the respondents. Attempts to revise the form post the deadline were also unsuccessful due to technical issues.The respondents maintained that they could ascertain if an assessee attempted to log into the system and whether the failure to upload details was due to a system error. The system log revealed that the petitioner did attempt to log in before the deadline, falling under a specific category. However, it needed to be established that the inability to upload details was due to a system error caused by the respondents.The court considered the submissions and found that the petitioner did attempt to upload necessary details, and the inability to establish a system error should not be a reason to deny him the benefit of carrying forward the tax credit. Referring to judgments from the Delhi High Court and the Himachal Pradesh High Court, which emphasized that accrued tax credits should not be denied due to procedural defects, the court allowed the writ petition. The court directed the respondents to permit the petitioner to revise the forms electronically or manually by 31.12.2019, without prejudice to the right of the authorities to verify the claim's genuineness. The respondents were instructed to facilitate electronic filing and resort to manual filing only if necessary, with verification of claims allowed without denial solely based on the filing date.