ITC transfer allowed where GSTN blocked Form ITC-02A; manual filing u/r 41A held valid

HC held that the tax authorities' refusal to acknowledge and transfer unutilized input tax credit (ITC) to the petitioner's newly registered business vertical was illegal and arbitrary. The court found that Form GST ITC-02A was unavailable on the GSTN portal for the entire statutory 30-day period, despite the petitioner having promptly raised a ticket with the GST Helpdesk and having submitted a manual Form ITC-02A to the jurisdictional authority within that period. Relying on Rule 41A of the GST Rules, HC directed the respondents to regularise and transfer ITC of Rs. 2,58,03,590/- to the petitioner's new registration as per its lawful entitlement, and allowed the writ petition.

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Issues:
Petitioner deprived of submitting Form GST ITC-02A online, Unable to avail Input Tax Credit, Availability of Form GST ITC-02A on GSTN Portal, Non-acceptance of manual submission, Financial difficulty faced by petitioner, Legal remedy sought through writ petition.

Analysis:
The petitioner, a registered dealer under the GST regime with two industrial units, approached the court challenging the respondent GST Department's action depriving them of submitting Form GST ITC-02A online. This form allowed the transfer of unutilized input tax credit to a newly registered unit within the same State. The petitioner faced difficulty as the form was not available on the GSTN Portal for the entire 30-day period from registration, leading to denial of transferring the credit to the new unit. Despite the petitioner's manual submission to the Deputy Commissioner, it was not accepted, causing financial hardship due to the inability to utilize the input tax credit for the new business's tax liability.

The court noted that the respondent did not dispute the non-availability of Form GST ITC-02A on the GSTN Portal during the crucial period. The petitioner's counsel emphasized that the petitioner raised the issue with the GST Helpdesk within the stipulated time, as evidenced by the response mail and manual submission within the 30-day limit. The respondent's counsel, while opposing the petitioner's submissions, also acknowledged the unavailability of the form on the portal within the prescribed period, and the manual submission by the petitioner.

Based on the admitted facts, the court found the respondent's failure to acknowledge and transfer the input tax credit amounting to Rs. 2,58,03,590 to the petitioner's new business unit as per Rule 41A of the GST Rules, as illegal, arbitrary, and unjust. Consequently, the court allowed the writ petition, directing the respondents to regularize the input tax credit in favor of the petitioner, enabling them to avail the credit through the next GSTR-3B return. The stay application was also disposed of in the judgment.

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