Transitional ITC remains a vested entitlement; CGST migration deadlines are directory and bona fide TRAN-1 errors can be corrected.

Transitional ITC under the earlier tax regime was treated as a protected vested entitlement, and the retrospective insertion of "within such time" in Section 140 of the CGST Act did not defeat relief recognised in Brand Equity. The court held that Rule 117 timelines are directory because the Act and Rules prescribe no consequence for delay, and the remedial mechanism cannot be confined only to portal glitches under Rule 117(1A). It further held that a bona fide clerical error in TRAN-1 could be corrected, and an unreasoned rejection was arbitrary. Relief was granted by directing revision of TRAN-1 and processing of the credit claim.

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Issues: (i) Whether the retrospective insertion of the words "within such time" in Section 140 of the CGST Act, 2017 displaced the relief granted in Brand Equity and validated the denial of transitional credit; (ii) Whether the time limits in Rule 117 of the CGST Rules, 2017 are mandatory or directory, and whether Rule 117(1A) can be confined only to technical glitches on the common portal; (iii) Whether the petitioner was entitled to correction and transition of the balance ITC where the TRAN-1 filing reflected a bona fide clerical error and the rejection was unreasoned.

Issue (i): Whether the retrospective insertion of the words "within such time" in Section 140 of the CGST Act, 2017 displaced the relief granted in Brand Equity and validated the denial of transitional credit.

Analysis: The amended transitional provision continued to protect accrued credit and did not, by itself, justify denial of the petitioner's claim. The court noted that the relief in Brand Equity was not founded solely on the absence of an express statutory time limit, but also on the character of transitional credit as a protected vested entitlement and on the arbitrariness of the restrictive administrative approach. The amendment therefore did not erase the other reasons supporting relief.

Conclusion: The retrospective amendment did not defeat the petitioner's claim or bar relief.

Issue (ii): Whether the time limits in Rule 117 of the CGST Rules, 2017 are mandatory or directory, and whether Rule 117(1A) can be confined only to technical glitches on the common portal.

Analysis: The court held that the transitional timelines were procedural and intended to facilitate migration, not to extinguish accrued credit. Since neither the Act nor the Rules prescribed a consequence for missing the timeline, the limitation was treated as directory. The classification between cases of technical difficulty and other genuine cases was found to be arbitrary, particularly because the expression "technical difficulty on the common portal" was undefined and incapable of a narrow, rigid construction. The court also held that the GST Council's own relaxation mechanism reflected a broader remedial intent.

Conclusion: The time limits were directory, and the relief mechanism could not be restricted only to cases of portal glitches.

Issue (iii): Whether the petitioner was entitled to correction and transition of the balance ITC where the TRAN-1 filing reflected a bona fide clerical error and the rejection was unreasoned.

Analysis: The court found that the form had been filed within time, but the wrong figures had been entered in the relevant column, causing short transition of credit. The error was clerical and apparent from the record, and the revised filing related back to the original filing. The rejection by the authorities was held to be arbitrary because no reasons were disclosed, despite repeated requests, and the petitioner's grievance was not addressed in a fair or meaningful manner. The refusal to permit rectification would have resulted in loss of vested credit without lawful basis.

Conclusion: The petitioner was entitled to revise TRAN-1 and avail the full transitional credit.

Final Conclusion: Relief was granted by directing the authorities to permit revision of TRAN-1 and to process the petitioner's transitional credit claim after verification.

Ratio Decidendi: Transitional credit accrued under the earlier tax regime is a protected vested entitlement, and where the statutory scheme contains no consequence for delayed or corrected filing, the prescribed transition timeline is directory and must be applied in a fair, non-arbitrary manner that permits correction of bona fide errors.

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