2021 (2) TMI 434 - HC - GST

Court allows submission of late TRAN-1 form for GST credit transfer, emphasizing vested rights

The court ruled in favor of the petitioner, allowing them to submit the required TRAN-1 form to carry forward the credit from their Cenvat account to the ... Carry forward of unutilized input tax credit under transitional provisions - entitlement to transitional credit despite procedural non compliance - TRAN 1 filing requirement and transactional formality - GSTR 3B return as reflection of credit - procedural or technical grounds cannot defeat vested right - electronic filing difficulties and relief for bona fide mistakes - verification of facts by tax authoritiesCarry forward of unutilized input tax credit under transitional provisions - TRAN 1 filing requirement and transactional formality - GSTR 3B return as reflection of credit - procedural or technical grounds cannot defeat vested right - Petitioner entitled to pursue carry forward of credit reflected in its returns despite non filing of TRAN 1 within prescribed time, and directed to be allowed to submit TRAN 1. - HELD THAT: - The court noted that the petitioner had an amount of credit lying in its Cenvat account on 08.07.2017 and had reflected that credit in its GSTR 3B filed within the prescribed period. The only objection raised by the respondents was non submission of TRAN 1 within the stipulated time; respondents did not dispute entitlement to the credit, its correctness, or that it was reflected in GSTR 3B. Relying on the reasoning in Adfert Technologies Pvt. Ltd. (paragraph 14) the court observed that unutilized transitional credit is a vested right which should not be taken away on mere procedural or technical grounds, particularly in an electronic regime where genuine mistakes or lack of familiarity with the portal may occur. The authorities retain the power to verify facts and figures, and therefore procedural non compliance alone, without disputing the substance, does not justify denial of the credit. In the circumstances and having regard to the portal being closed and the petitioner's claim, the court directed respondents to permit submission of TRAN 1 either electronically or manually by a specified date, subject to verification by the authorities.Respondents directed to permit submission of TRAN 1 electronically or manually on or before 15.03.2021 and to coordinate with the petitioner for its submission.Final Conclusion: Petition allowed to the limited extent that the petitioner shall be permitted to submit TRAN 1 (electronically or manually) by 15.03.2021 to claim the transitional credit reflected in its GSTR 3B; respondents may verify the claim but cannot deny the credit solely on procedural grounds. Issues:Carrying forward of credit in petitioner's Cenvat account to GST regime due to non-filing of TRAN-1 form.Analysis:The petition concerns the carrying forward of an amount of Rs. 9,96,637 from the petitioner's Cenvat account to the GST regime in Jammu and Kashmir. The petitioner failed to submit the required TRAN-1 form and instead submitted GSTR-3B. The Assistance Commissioner informed that the reason for non-filing of TRAN-1 was not due to a technical glitch, leading to the petitioner's case being disregarded. The petitioner's counsel suggested reversing the submission and proceeding with filing TRAN-1 to claim the benefit. Despite lack of awareness about the procedure, the petitioner mentioned the credit in the GSTR-3B within the stipulated time. The respondents did not dispute the entitlement to carry forward the credit or the correctness of the amount but raised objections regarding the non-submission of TRAN-1 within the prescribed period.The petitioner argued that being unaware of the procedure should not deprive them of the benefit, especially when the credit was reflected in the GSTR-3B return. Citing a previous judgment, the petitioner contended that the unutilized credit is a vested right that cannot be denied on procedural or technical grounds. The court agreed with this argument, emphasizing that the introduction of the GST regime allowed for carrying forward unutilized credits, and technical difficulties should not hinder this process. The court directed the respondents to allow the petitioner to submit the TRAN-1 electronically or manually by a specified date, emphasizing the importance of honoring the petitioner's right to claim the credit.The judgment highlighted the importance of not depriving individuals of their rights due to procedural or technical issues, especially in the transition to a new tax regime. The court's decision to permit the petitioner to submit the required form to claim the credit underscores the principle of upholding vested rights, even in the face of administrative challenges. This case serves as a reminder of the need for flexibility and understanding during transitions to new legal frameworks, ensuring that individuals are not unfairly disadvantaged due to technicalities.