Transitional Credits: Tran 1 can be filed till 30 June 2020 despite retrospective Amendment-Delhi HC
High Court of Delhi, SKH SHEET METALS COMPONENTS v/s UNION OF INDIA & ORS.-W.P. (C) 13151/2019
The assessee in order to avail transitional credit submitted Form Tran-1, after which only part of credit was reflected in GST portal.
The assessee revised Tran-1 but the amount was still not transferred to the electronic credit ledger.
Thereafter, the assessee continuously followed up with the authorities but no positive outcome came, and, hence, filed writ before the High Court of Delhi.
The Hon’ble High Court observed that on account of clerical mistake while filing Tran-1 there had been short transitioning of credit.
The stand of Central Government, focusing on condemning the assessee for the clerical mistake and not redressing the grievance is disgusting.
The Court in the case of Brand Equity allowed belated filing of Tran-1 till 30.06.2020 and also held that time limit prescribed under Rule 117 for transitioning of credit is directory in nature.
In view of the retrospective amendment in Section 140 notified on May 18, 2020 of the CGST Act the power to prescribe a time limit for filing TRAN-1 has been provided by inserting the words ‘within such time´ with effect from July 1 2017.
However, the said amendment was not cited before the Court to contest and on lack of specific challenge to the amendment, legality of the said provision viz-a-viz the judgment of Brand Equity still upholds.
The transitional provisions and the language of section 140 of the Act in particular, even after amendment, manifests the intention behind the said provision is to save the accrued and vested ITC under the existing law.
Thus, the decision in case of Brand Equity is not entirely depending on the fact that CGST Act did not prescribe for any time limit for availing the transition of the input tax credit but several other reasons enumerated in the Brand Equity decision continue to apply regardless of amendment to Section 140 of the CGST Act.
Therefore, the Hon’ble High Court permitted the assessee to revise TRAN-1 on or before 30.06.2020 and transition the entire ITC, subject to verification by the authorities.
Further, the authorities are directed to either open the GST portal enabling the assessee to file revised TRAN-1 electronically or accept the same manually.
