TaxTMI 
TaxTMI 
Guidelines for verifying the Transitional Credit in light of the order of the Hon’ble Supreme Court in the Union of India vs. Filco Trade Centre Pvt. Ltd., SLP(C) No. 32709-32710/2018, order dated 22.07.2022 & 02.09.2022
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....he matter of Union of India vs. Filco Trade Centre Pvt. Ltd., SLP(C) No. 32709-32710/2018. The operative portion of the judgment is as follows: "1. Goods and Service Tax Network (GSTN) is directed to open common portal for filing concerned forms for availing Transitional Credit through TRAN-1 and TRAN-2 for two months i.e. w.e.f. 01.09.2022 to 31.10.2022. 2. Considering the judgments of the High Courts on the then prevailing peculiar circumstances, any aggrieved registered assessee is directed to file the relevant form or revise the already filed form irrespective of whether the taxpayer has filed writ petition before the High Court or whether the case of the taxpayer has been decided by Information Technology Grievance Redressal Committee (ITGRC). 3. GSTN has to ensure that there are no technical glitch during the said time. 4. The concerned officers are given 90 days thereafter to verify the veracity of the claim/transitional credit and pass appropriate orders thereon on merits after granting appropriate reasonable opportunity to the parties concerned. 5. Thereafter, the allowed Transitional credit is to be reflected in the Electronic ....
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....ax Act, 2017 (hereinafter referred to as "MGST Act"), hereby issues the following guidelines for verifying the Transitional Credit: 5. Verification of the Transitional Credit 5.1 The jurisdictional tax officers can access the TRAN-1/TRAN-2 filed/revised by the applicant on their Back Office (BO) systems. Further, a self-certified downloaded copy of TRAN-1/TRAN-2 filed/revised by the applicant shall also be made available to the jurisdictional tax officer by the said applicant as mentioned in Para 4.5 of Trade Circular No. 11T of 2022 dated 26.09.2022. 5.2 The verification of the transitional credit shall be conducted by the jurisdictional tax officer who will pass an appropriate order regarding the veracity of the claim filed by the applicant, based on all the facts and the provisions of the law. In respect of TRAN-1/TRAN-2 filed/revised by the applicant under the administrative control of the central tax authorities, such verification and issuance of order shall be done by the jurisdictional officer of central tax, whereas in respect of TRAN-1/TRAN-2 filed/revised by the applicant under the administrative control of the state tax authorities, the same shall be done by the....
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....tral tax as well as state tax referred in Para 6.1 below through his official email ID or physically. Similar action, as above, shall also be taken by the jurisdictional state tax officers in cases where the applicant is under the jurisdiction of state tax officer and where the transitional credit claimed has component of central tax also. 5.3.3 The jurisdictional tax officer shall, in parallel, continue the verification of the remaining portion of the transitional credit at his end. 5.3.4 The jurisdictional tax officer and the counterpart tax officer shall verify the transitional credit claimed under the CGST or the SGST head, as the case may be, by referring to the guidelines detailed in Annexure I to this circular for transitional credit pertaining to central tax and the guidelines detailed in Annexure-III to this circular for verification of transitional credit pertaining to the State Tax/Union territory Tax, as applicable. While conducting the verification, the officer must also check whether any adjudication or appeal proceedings in TRAN-1/TRAN-2 related matter are pending/ concluded against the applicant. In such cases, where any adjudication or appellate proceedings h....
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....al tax officer in such cases. If required, the jurisdictional tax officer may seek comments of the counterpart officer on the submissions made by the applicant in so far as the said submission relates to the central tax being administered by such counterpart officer. 5.3.8 After considering the facts of the case, including verification report received from the counterpart officer, submissions made by the applicant and the comments, if any, of the counterpart officer on the same, the jurisdictional tax officer shall proceed to pass a reasoned order, preferably within a period of fifteen days from the date of personal hearing, specifying the amount of transitional credit allowed to be transferred to the electronic credit ledger of the applicant and upload a pdf copy of the said order, on the common portal for crediting the amount of allowed transitional credit to the electronic credit ledger of the applicant. In any case, such order shall be passed within a period of 90 days from 01.12.2022 i.e. up to 28.02.2023. 5.3.9 It must be noted that this special procedure of filing TRAN-1/TRAN-2, verification thereof including issuing notices and passing orders is as per the directions ....
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....;THE APPLICANT IN TRAN-1/TRAN-2 1. Description of Entries in TRAN-1 Table In the Form TRAN 1 there are only six entries which decide all the CGST credit which is posted in the electronic credit ledger. These entries are briefly described below. It is advised that the full text of law be referred for better understanding of the issue. S. No. Table No. in TRAN-1 Provision in CGST Act Indicative list of nature of Credit 1. Col. 6 in table 5(a) 140(1), 140(4)(a) and 140(9) This table captures detail of the CENVAT credit carried forward in the return (ER-1/2/3 or ST-3) relating to the period ending with 30.06.2017, subject to conditions specified in section 140(1) of CGST Act, by the manufacturers/ service providers. 2. Column 11 of table 6(a) 140(2) This table captures details of unavailed credit of capital goods in the pre-GST era. Capital Goods credit was allowed to be availed in two installments of 50% each. This table is meant to be used b....
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.... the receivers and a corresponding debit entry in made in the ledger of the Centrally registered unit. 6. Column (7) in Table 11 Section 142 (11)(c) read with Rule 118 of CGST Rules Transition of credit in respect of supplies which attracted both VAT and Service Tax in pre-GST era and where VAT and Service Tax both were paid, before 1st July 2017, on any supply but the supply is made after 1st July, 2017. The taxable person is entitled to take as CGST credit, the service tax paid under the existing law to the extent of supplies made after 1st July, 2017 as he would be liable to pay CGST in respect of such supplies. (VAT credit cannot be taken as Service tax credit and vice versa). 2. CHECKS FOR VERIFICATION OF ENTRIES IN TRAN-1 TABLE: As a matter of assistance, following checks are suggested in relation to the entries provided in various tables of TRAN 1. The list of checks is not exhaustive but is indicative only based on provisions of law, the likely error and the inputs received from ....
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....ovided the second installment was not availed in any of the returns filed in the first quarter of 2017-18 under Central Excise or Service Tax. If no credit was availed earlier, credit of entire amount cannot be availed through this Table. In respect of invoices involving large credit, due verification as deemed fit may be done. Checks for Table 7(a), Entry 7A: 5.1 Check 5: In cases where the credit is being shown by an assessee who was registered in Central Excise or Service on account of inputs relating to exempted goods, carefully check whether the assessee has followed the provisions of rule 6 of CENVAT Credit Rules in the period prior to GST. Case I: Only exempted goods/services were being manufactured or provided: Rule 6(2) of CENVAT Credit Rules did not allow any credit in the CENVAT register if only exempted goods were being manufactured. No credit can flow from return&nb....
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....sp;terms of rule 15(2) of CCR, 2017 read with notification no. 21/2017-CE (NT) dated 30.06.2017 (Capital Goods having value more than Rs. 25,000, goods to be identifiable by a distinct number etc.) e.g.: Dealers of new car. Checks for Table 7(a), Entry 7B: 6.1 Check 7: Check that credits on stock declared on which credit can be claimed in terms of rule 117(4) of the CGST Rules, 2017 are reasonable. Where the stock declared in very high, stock declared in VAT return or any other collateral document, where stocks were declared, may be cross-checked. It may be noted that credit of this stock would be available on sale being made and TRAN 2 return being filed. It is reiterated that electronic credit ledger would get populated through TRAN-2 and not through TRAN-1. 6.2 Check 8: Check that the assessee has not declared this stock in any other table or has not availed this credit from any other table, say table 5(a). Where the person availing credit ....
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.... credit and blocked credit may be followed during the verification process of the transitional credit. ANNEXURE-II VERIFICATION REPORT FOR TRAN-1/TRAN-2 TO BE SUBMITTED BY THE COUNTERPART OFFICER TO THE JURISDICTIONAL TAX OFFICER 1. Basic information: (a) Name (b) GSTIN (d) Whether transition credit claimed earlier Yes/ No 2. (a) Whether SCN/Adjudication order issued in respect of credit availed through TRAN- 1/TRAN-2 filed earlier; if "Yes", provide reference number and date: (b) If answer to (a) above is "Yes", then amount of transitional credit disallowed/proposed to be disallowed out of total claim filed by the applicant earlier: * Table of TRAN- 1/TRAN-2 # Amount of credit disallowed/ proposed to be disallowed @ Grounds on which credit is disallowed/ proposed to be disallowed $ Whether recovered (a) (b) (c) Notes: 1) Add additional rows if required 2) *Specify the serial number of the Table (of e....
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....sp; (e) 7(a)(7A) of TRAN- 1 (f) 7(a)(7B) of TRAN- 1 (g) 7(b) of TRAN-1 (h) 7(c) of TRAN-1 (i) 8 of TRAN-1 (j) 10(a) of TRAN-1 (k) 10(b) of TRAN-1 (l) 11 of TRAN-1 (m) Aggregate of Table 4 of TRAN- 2 (n) Aggregate of Table 5 of TRAN- 2 5. Other relevant information, if any (Please give details): Place: Date: Signature of counterpart officer (Name and designation of counterpart officer) ANNE....
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.... and developers under sections 140(1), 140(6) and 142(11)(c) Para 8 of Internal Circular No. 23A of 2018 dt 1st Sep 2018 2. It is mentioned in above referred circulars that excess claim of transitional credit be reversed in GSTR-3B. In this respect, it must be noted that this special dispensation of filing TRAN -1/TRAN-2, verification thereafter and crediting eligible amount of credit to electronic credit ledger is as per the directions issued by the Hon'ble Supreme Court vide order dated 22.07.2022, wherein, it is directed that the Transitional Credit claimed by the applicant shall be credited in his electronic credit ledger to the extent allowed by the jurisdictional tax officer through an order after carrying out necessary verifications. Hence, instructions given in above referred Internal Circular regarding reversal of transitional credit claimed during this special 2-months period shall not be applicable to TRAN-1/TRAN-2 filed during this special window period. 3. As per second proviso to section 140(1), the transitional credit which is attributable to claim related to section 3, 5(3), 6, 6A or 8(8) of the CST Act, 1956 which is not substantiated in the ma....