Order to benefit assessees unable to transition unutilised credit of the pre-GST regime
The Supreme Court on Friday directed the Government to open GST portal (GSTN) for settling claims of transitional credit. Eperts say this ruling will be applicable to those who have yet to file the claim or those who want to revise their claim.
The apex court said that portal to be opened for 60 days, from September 1 to October 31. It will be available for all assessees irrespective of whether they have filed Writ or not. Field Formation, all over India, will be given 90 days time to verify the veracity of the claims and pass orders on merits in accordance with law, after granting reasonable opportunity.
The order was passed by a Division Bench of Justices Abdul Nazeer and JK Maheshwari on an Special Leave Petition (SLP) filed by the Centre against rulings by various High Courts.
Transitional credit refers to use of tax credit accumulated up to June 30, 2017, that is, last day of the erstwhile central excise and service tax regime. After the introduction of Goods & Services Tax (GST), a special provision was made for credit accumulated under VAT, excise duty or service tax to be transited to GST but within a certain deadline. However, technical glitches among other reasons could not enable many of the assessees to transit the credit. Then the matter reached various High Courts, most of them ruled in favour of assessees.
A senior tax official told BusinessLine that unsettled credit claim could be around ₹250-300 crore, while some reports suggest it could be up to ₹500 crore.
Commenting on the ruling, Saurabh Agarwal, Tax Partner with EY, said this benefit is available to all taxpayers whether or not they have filed a writ petition or whose claim got rejected on the ground that there was no technical glitch. “This will help companies in utilising credit which was otherwise blocked, improve working capital and reduce litigation,” he said.
Tanushree Roy, Director (Indirect Tax) with Nangia Andersen, says availing of unutilised ITC is a vested right of the taxpayers and cannot be taken away on account of technical grounds. Apart from those unable to transition unutilised credit of the pre-GST regime due to snags, it would also benefit assessees who could not file Form Tran-1 on account of ignorance of law. At the same time, assessees who filed Form Tran-1 incorrectly, would get an opportunity to revise the same. “The Supreme Court by this judgment has protected/upheld the vested right of the taxpayers,” she said.
Vivek Jalan, Partner, Tax Connect Advisory, says as directed by the apex court, the GSTN has to ensure that the GST Portal is free from technical glitches in this period so that order can be suitably implemented. However, “this claim is not straight pass through. In case the officer concernedconsiders this Transitional Credit as ineligible, he may dispute the credit against which a taxpayer can contest,” he cautioned.
Published on July 22, 2022