A key contention of the tax-payers was that the relevant GST returns could not be filed due to tech glitches on the portal
The Supreme Court has asked the Centre to file an affidavit on technical glitches and problems faced by assessees while filing Form GST TRAN-01 (related to transitional credit) details. A ruling in this matter will decide the fate of transitional credit for many assessees.
Stays HC ruling
The apex court has also stayed the November 2019 ruling by the Punjab & Haryana High Court which has asked the Tax Department to permit GST assessees to file for transitional credit. In fact many such rulings have been given by different High Courts. Now, the implementation of all such rulings will depend upon what the apex court finally decides.
The apex court further said the factual assertions made in the writ petitions in this regard will be dealt with concretely and expressly and if required, by taking the help of experts. The court asked the Centre to file an affidavit within four weeks from Monday, with a copy to the respondents — tax payers — who would be at liberty to file the response within four weeks thereafter.
Transitional credit refers to the use of tax credit accumulated up to June 30, 2017, that is, last day of erstwhile central excise and service tax regime. Post-introduction of Goods & Services Tax (GST), special provision was made for credit accumulated under VAT, excise duty or service tax to be transited to GST. Barring registered dealers opting for composition scheme, all other assessees were given the opportunity to avail themselves of the transitional credit.
However, there were some conditions. The credit will be available only if the returns for the last six months — from January 2017 to June 2017 — were filed in the previous regime (VAT, excise and service tax returns had been filed). And Form TRAN I (to be filed by registered persons under GST, may be registered or unregistered under the old regime) has to be filed by December 27, 2017, to carry forward the input tax credit. Also, Form TRAN I can be rectified only once. The government permitted those registered persons who furnished evidence of attempt to load TRAN-I up to December 27, 2017, to file TRAN-I by March 31, 2019.
Abhishek Jain, Tax Partner with EY, said the High Court in late 2019 held that the taxpayers shall not be denied an opportunity to carry forward their input tax credit pertaining to pre-GST regime into the GST regime merely on account of delay in filling of relevant GST forms. One of the major contentions put forward by the tax-payers was that the relevant GST returns could not be filed due to technological glitches on the GSTN portal.
“The industry is keenly waiting for the Supreme Court’s final word on the issue of non-timely filing of TRAN 1/2 and denial of transitional credit, with various High Courts judgments already being assessee favourable on this issue,” he said.