2022 (2) TMI 996 - HC - GST

Technical Difficulties Cannot Bar Input Tax Credit Transition Under GST When Credit Was Available Under Previous Tax Regime

M/s. SS Bright Steels, M/s. Saro Steels Versus The Union of India, The Assistant Commissioner, Goods and Service Tax, The Nodal Officer, The Central Board of Excise and Customs, Goods and Service Tax Network [GSTN]

The HC ruled in favor of the petitioner who faced technical difficulties transitioning input tax credit under GST. The court held that credit available ... Transition of input tax credit - due to technical glitches in the web site, petitioner could not successfully transition the credit for utilization - HELD THAT:- The amount which is to be transitioned by filing TRAN-I or TRAN-II as per Section 140 of the respective GST enactments read with Rule 117 of the respective GST rules is to be allowed - credit available under the provisions of the erstwhile Central Excise Act, 1944 read with CENVAT Rules, 2004 remaining un-utilized on the date of limitation of GST Act, 2017 for the Central and the State cannot be denied such credit and unless the law permits lapsing of such credit. If there was a successful transition in terms of Section 140 of the respective GST enactments read with relevant rules such credits would have been available for discharging tax liability. Hon'ble Division Bench of this Court recently in the case of COMMISSIONER OF GST AND CENTRAL EXCISE, ASSISTANT COMMISSIONER OF GST AND CENTRAL EXCISE, CENTRAL BOARD OF EXCISE AND CUSTOMS, PRINCIPAL COMMISSIONER VERSUS M/S. BHARAT ELECTRONICS LIMITED [2021 (11) TMI 818 - MADRAS HIGH COURT] has granted relief to the dealers who have transitioned credit under the provisions of the GST enactments. This writ petition is disposed off by directing the respondent to consider the petitioner's representation dated 26.11.2019 and the same is disposed off within a period of three months from the date of receipt of a copy of this order and in the light of the observations of the Hon'ble Division Bench of this Court in the above case - petition disposed off. Issues:1. Transition of input tax credit due to technical glitches.2. Disposal of representation dated 26.11.2019.3. Scope for maintaining TRAN-I.4. Denial of credit under GST Act, 2017.5. Relief granted to dealers transitioning credit.6. Compliance with Input Tax Credit scheme.Analysis:1. The petitioner faced difficulties transitioning input tax credit on 28.08.2017 due to technical glitches on the website, preventing successful credit utilization.2. The petitioner submitted a representation dated 26.11.2019 regarding the TRAN-I return filed on 30.08.2017, which remained unresolved. The GST Network informed the petitioner that the issue was resolved, but the representation was not disposed of.3. The respondent argued that there is no scope for maintaining TRAN-I, asserting that the writ petition lacks merit.4. The Court emphasized that credit available under the Central Excise Act, 1944, along with CENVAT Rules, cannot be denied unless the law permits lapsing of such credit. Successful transition of credits under GST enactments allows for discharging tax liabilities.5. Referring to a previous case, relief was granted to dealers who transitioned credit under GST enactments, emphasizing the importance of substantial compliance and not frustrating the Input Tax Credit scheme due to technicalities.6. In light of the previous case, the Court directed the respondent to consider and dispose of the petitioner's representation dated 26.11.2019 within three months, following the observations of the Division Bench. The writ petitions were disposed of accordingly, with no costs incurred, and connected miscellaneous petitions were closed.