Goods & Services Tax commonly known as GST was formally ushered in at a late-night session of parliament, being dubbed as the flag bearers of Economic Independence. However, even after 3 years, the promise still looks nothing but a far-fetched thought or an illusion. There could be "n" no. of reasons which can convince you How "GST" has failed to make the desired effect or impact and how businesses are still coping with the Law.
One Burning Issue pending for 3 years since the advent of GST is the "Transitioning of tax credits from the erstwhile regime into the GST regime". Right from the time when GST was launched, there has been a lot of clutter around various aspects of transitional credit provisions. Sad to say, even after 3 years of GST enactment, the issue is still undecided.
Whether the Input Tax Credit of earlier Laws is eligible to be carried forward under GST after 27th December 2017 i.e. the due date of filing TRANSITION FORM-1 under GST? or If any assessee was not able to file TRAN-1 form within the due date because of GSTN Portal's technical glitches or any other reason, Is he eligible to take that Input tax Credit (ITC) under GST or not ?
Many High Court Judgements have been announced in favour of assessees but the GST department is still not permitting the assessees to use this benefit based on such HC Judgements.
In this article, the most highlighted High Court as well as Supreme Court judgements are innumerated in a summarised manner with conclusions in a chronological order for a quick view for our viewers :
Now we will discuss all the above-mentioned judgements with their respective decisions:
1) In August 2019: Chogori India Retail Ltd. vs Union of India and Others (Delhi High Court) dated 9th August 2019.
Decision : A direction was been issued to the Respondent to either re-open the GSTN Portal to enable the Petitioner to file its TRAN-1 Form electronically, failing which to permit it to file manually on or before 13th September, 2019. Thereafter, the Petitioner's claims are to be processed expeditiously in accordance with law.
2) In September 2019: M/S Siddharth Enterprises Vs NODAL Officer (Gujarat High Court) dated 06th September 2019.
Decision: It was held that Transitional Credit cannot be denied only because form Tran-1 or Tran-2 could not be filed.Requirement of filing of Tran-1 or Tran-2 returns is procedural in nature and not mandatory and therefore right of transitional credit cannot be denied to those taxpayers who could not file such returns by citing the reference of Article 14 of the Constitution of India.
3) In November 2019: Adfert Technologies Pvt. Ltd. Vs Union of India & Ors. (Punjab & Haryana High Court) dated 04th November 2019.
Decision: HC directed the GST Department to permit the Petitioner to file or revise already filed incorrect Tran-1 either electronically or manually.The Respondents are at liberty to verify genuineness of claims of Petitioners, but nobody shall be denied carrying forward legitimate claim of CENVAT/ITC on the ground of non-filing of Tran-1 by 27th December 2017.
4) In December 2019: Hans Raj Sons Vs Union of India and Others (Punjab & Haryana High Court) dated 16th December 2019.
Decision : It was held that, In Case, the petitioner is hampered in any manner from availing the benefit due to non-opening of Tran-1 form online at GST Portal by the Department, then the petitioner shall be permitted, in the alternative to claim the benefit of underutilized credit in their return under Form GSTR-3B filed for the month of January 2020, either electronically or manually.
5) In February 2020 : Union of India & Ors. Vs. Adfert Technologies Pvt. Ltd. (filed SLP in Supreme Court) dates 28th February 2020.
Decision : In the facts and circumstances of the present case, we are not inclined to exercise our jurisdiction under Article 136 of the Constitution. We accordingly dismiss the Special Leave Petition. Pending application(s), if any, stand disposed of.
Supreme Court has been dismissed the Special Leave Petition filed by the department.
6) In May 2020: Brand Equity Treaties Ltd. v/s Union of India and others [2020] dated 5th May 2020
Decision : It was held that the fact that such an amendment was made, provided enough testimony to the fact that it is well within the knowledge of the government that certain inadequacies were present in the GST system.
7) In June 2020: Union of India and Others v/s Chogori India Retail Ltd. (filed SLP in Supreme Court) dated 3rd June 2020.
Decision : In the facts of the present case, we are not inclined to interfere in this Special Leave Petition. The Special Leave Petition is dismissed accordingly. However, question of law is kept open. Pending applications, if any, stand disposed of.
Supreme Court has dismissed the Special Leave Petition filed by the department.
8) In June 2020: Haryana Mill Store v/s Union of India and others (Punjab and Haryana High Court) dated 19th June 2020.
Decision : In view of decision of this Court in the case of Adfert Technologies Pvt. Ltd. (Supra) and Delhi High Court in the case of Brand Equity Treaties Ltd. (Supra) present petition deserves to be allowed and accordingly allowed. The Respondents are directed to permit Petitioner to upload TRAN-I on or before 30.06.2020 and in case Respondent fails to do so, the Petitioner would be at liberty to avail ITC in question in GSTR-3B of July 2020. No doubt, the respondents would be at liberty to verify genuineness of claim(s) made by Petitioner.
9) In June 2020 : Union of India and Others Vs. Brand Equity Treaties Ltd. dated 19th June 2020.
Decision : Union of India has filed Special Leave Petition in the Supreme Court against the Delhi HC judgment. Upon hearing the counsel, the Supreme Court has given the STAY Order in the favour of Union of India.
Now the decision given by Delhi HC in the case of Brand Equity Treaties ltd. for opening the TRANSITION-1 form electronically or to accept it manually has become the subject matter. The Department will not be under obligation to open the TRANSITION-1 form electronically or to accept it manually as the SC has given them a STAY order against it.
10) In June 2020 : CBIC GST Policy Wing issued an advisory F.No.CBEC-20/10/11/2019-GST/1001 dated 22nd June 2020.
Decision : It is clear that a taxpayer cannot claim input credit of the duty or tax paid as a vested right under GST and input credit is in the form of a concession / benefit and reasonable restrictions on availing such credit can be imposed. Thus, a taxpayer cannot claim credit accumulated under the erstwhile taxation regime (Central Excise and Service Tax) as a vested right for transition under GST. Provisions have been made under section 140 of the CGST for transition of credit for different class of tax payers and restrictions, if any, placed on a particular class of taxpayers are reasonable in nature and by no stretch of imagination be termed as perverse, arbitrary and unreasonable.
Department has clearly mentioned that Transitional Credit is not a fundamental right given by Constitution of India and every registered person under GST must follow the procedural aspect (should have to file TRANS-1 form within due date).
AUTHOR’S VIEW: It is advisable to all taxpayers to first connect with your Jurisdiction Officer with proper application and intimation by giving the references of High Court judgements of specific state because if you will claim all your Transitional Credits based on High Court judgements in your GSTR-3B then officers has the power to impose penalty and Interest based on the advisory issued by GST Policy wing.
SOURCE : www.gst.gov.in, High Court and Supreme Court case laws
Disclaimer : TAXGyaAan is meant purely for the educational purpose of Tax Laws and Regulatory Updates. It will not be treated as professional advice. This Blog should not be substituted for professional advice. For specific Queries, please post in the comments section.
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