2025 (9) TMI 1592 - HC - GST

Allow petitioner to upload corrected TRAN-1 within one month to claim transitional input tax credit under Section 140

The HC allowed the writ petition and directed respondents to provide facilities enabling the petitioner to upload the TRAN-1 form with correct entries ... Transitional credit - Denial of Input Tax Credit that was available to the petitioner pertaining to the pre-GST period - denial of opportunity to the petitioner to avail the benefit of Section 140 of the CGST Act - HELD THAT:- Of course, it is true that, the reasons for not accepting Ext.P7 TRAN-1 form submitted by the petitioner, was not attributable to the portal or to the respondents. As rightly pointed out by the learned standing counsel for the respondents, the same was a mistake on the part of the petitioner, in entering the necessary details in a wrong column. Therefore, Ext.P8 error occurred and the application was rejected. However, the question that arises here is whether, merely because of an error on the part of the petitioner, the benefits which the petitioner was otherwise entitled to, could be denied. In this context, it is relevant to refer to the decision rendered by this Court in M/S.G & C Infra Innovations v. Union of India [2022 (5) TMI 694 - KERALA HIGH COURT], wherein, an identical situation arose, with a subtle variation that the petitioner had uploaded the GST TRAN-1 Form on 01.09.2017, when the prescribed cut-off date for filing the same was 27.12.2017. In the said decision, permission was granted to the petitioner therein. It is found that the circumstances that are existing in this case, are similar to that of the case dealt with by the Honourable Supreme Court in the aforesaid decision. Of course, it is true that, as rightly pointed out by the learned standing counsel for the respondents, as the facilities for uploading the TRAN-1 were made in the portal only for that particular period, being a procedure that was time-bound, such facilities are no longer available in the portal - this issue was also taken note of by the Honourable Supreme Court, in the decision in Aberdare Technologies Private Limited & Ors [2025 (4) TMI 101 - SC ORDER] and it was observed that, the software limitations itself, cannot be a justification to deny such reliefs, as the software is meant to ease compliance and can be configured. Therefore, since it is an admitted position, as per the statement submitted by the respondents that, the petitioner attempted to submit Ext.P7 application on 30.11.2022 at 19.56 hours, which was within the date stipulated by the Honourable Supreme Court, an appropriate opportunity has to be granted to the petitioner to claim the said benefits, after curing the defects in the application. This writ petition is disposed of with a direction to the respondents to ensure that the necessary facilities are made to enable the petitioner to upload the TRAN-1 Form with correct entries, within a period of one month from the date of receipt of a copy of this judgment. ISSUES PRESENTED AND CONSIDERED 1. Whether a registered taxpayer migrating to GST is entitled to carry forward Input Tax Credit (pre-GST) under Section 140(1) of the CGST Act by filing Form TRAN-1 within the prescribed/extended time. 2. Whether rejection of TRAN-1 upload caused by validation error arising from taxpayer's erroneous data entry (as distinct from portal malfunction) disentitles the taxpayer from claiming transitional credit when the attempted filing was made within the extended cut-off date. 3. Whether software/portal limitations or the unavailability of upload facilities after the statutory/extended period can be a valid ground to deny relief for bona fide mistakes or technical impediments, and whether remedial relief (including enabling portal facilities or permitting manual filing) is appropriate. 4. Whether human/clerical errors in the TRAN-1 filing process justify refusal to allow correction and subsequent claim of transitional credit, having regard to constitutional property protections and equitable considerations. ISSUE-WISE DETAILED ANALYSIS Issue 1 - Entitlement under Section 140(1) Legal framework: Section 140(1) provides transitional entitlement to carry forward CENVAT/eligible duties as credit into the electronic credit ledger of a registered person (other than composition taxpayers), subject to prescribed manner and timelines; Form TRAN-1 is the prescribed medium. Precedent treatment: The Court takes note of prior High Court judgments allowing claims where TRAN-1 was filed within prescribed/extended timelines and of Supreme Court directions extending time for TRAN-1 filings. Interpretation and reasoning: The Court recognises that where the taxpayer had bona fide pre-GST credits and made an attempt to file TRAN-1 within the time fixed (including judicially extended time), entitlement under Section 140(1) exists subject to proper filing/validation. Ratio vs. Obiter: Ratio - entitlement under Section 140(1) is preserved where the taxpayer attempts to file within the time allowed and the credit claimed falls within the statutory scope; procedural defects in filing are not per se an extinction of the substantive statutory right. Conclusion: The petitioner is substantively entitled to transitional input tax credit under Section 140(1) if properly claimed within the prescribed/extended period. Issue 2 - Effect of validation error caused by taxpayer's erroneous data entry Legal framework: TRAN-1 filing involves table-wise entries with validations linked to statutory provisions (e.g., Section 140(5) related data requirements); online utilities enforce validation rules. Precedent treatment: The Court cites decisions where relief was granted in analogous factual matrices (including cases where genuine filing attempts were made and relief allowed), and the Supreme Court's observations favouring remedy for bona fide human errors. Interpretation and reasoning: Although the portal produced a validation error attributable to incorrect placement of data by the taxpayer, the Court distinguishes between (a) deliberate noncompliance and (b) bona fide clerical/formatting mistakes made in the course of filing. The Court accepts respondent's factual proposition that the error stemmed from mis-entry but holds that such an error, when the filing attempt was within the allowed time, does not automatically extinguish the taxpayer's statutory entitlement to the credit. Ratio vs. Obiter: Ratio - a bona fide validation error arising from taxpayer's clerical mistake on an otherwise timely filing does not necessarily preclude judicially-ordered relief to enable correction and permit claim of transitional credit. Conclusion: The taxpayer's mistake in entering data in an incorrect column (producing a validation error) does not bar correction and adjudication of the claim where filing was attempted within the extended time; relief to cure defects is appropriate. Issue 3 - Whether software/portal limitations or lapse of upload facility can justify denial of relief; appropriate remedial measures Legal framework: Statutory timelines and prescribed electronic procedures co-exist with administrative powers to facilitate compliance; courts may direct administrative measures to effect statutory rights where procedural barriers impede rightful claims. Precedent treatment: The Court relies on the Supreme Court's observation that software limitations cannot, without more, justify denial of relief for bona fide errors and that timelines for correcting such errors should be realistic. High Court authorities have permitted corrective opportunities and treated late uploads as within time where judicially extended cut-off applied. Interpretation and reasoning: The Court recognises administrative difficulty in re-opening a time-bound portal but concludes that software limitation is not a good justification to deny substantive statutory rights. Given the petitioner's timely attempt (within the judicially extended deadline) and lack of tax evasion, equitable and pragmatic remedial measures are warranted. The Court balances administrative convenience against the taxpayer's proprietary right in the credit balance and the purpose of transitional provisions. Ratio vs. Obiter: Ratio - administrative/technical unavailability of the portal after the deadline is not a sufficient ground to refuse relief where the taxpayer attempted timely filing and the error is remediable; the competent authority should enable upload or accept the claim as if filed within time if submissions are furnished within a court-directed short window. Conclusion: The respondents are directed to provide necessary facilities to enable correct upload of TRAN-1 within one month; if the corrected TRAN-1 is submitted within three weeks after facilities are provided, it will be treated as if submitted within the statutory/extended time. Issue 4 - Human/clerical error, property rights and equity in allowing correction Legal framework: Credit standing in favour of an assessee is treated as a property right; constitutional protection (Article 300A) and principles of natural justice and business facilitation inform remedial intervention where rights are lost by procedural mishap rather than statutory denial. Precedent treatment: The Court refers to High Court observations that credit is property and cannot be extinguished except by law; Supreme Court guidance urging reasonable timelines for correcting bona fide errors is applied. Interpretation and reasoning: The Court emphasises that denial of credit due to clerical mistakes runs counter to the statutory purpose and causes double payment where tax already paid is not allowed as credit. Given absence of mala fide conduct or tax evasion, and consistent authorities supporting remedial relief, the Court exercises equitable jurisdiction to permit correction. Ratio vs. Obiter: Ratio - bona fide human/clerical errors affecting entitlement to input tax credit merit corrective opportunity; denial without such opportunity would unjustly deprive taxpayer of a proprietary benefit. Conclusion: The Court grants relief to cure clerical/validation defects and protects the taxpayer's credit claim, subject to procedural correction and competent consideration by authorities as if filed within time. Cross-References See Issue 2 and Issue 3 - the Court's direction to enable upload and to treat corrected submission as within time synthesises the principles that (a) substantive entitlement under Section 140(1) survives bona fide procedural error, and (b) software limitations cannot be a bar to remedy where timely attempt was made.