Supreme Court provides one-time window to taxpayers to claim transitional credit under GST

This Tax Alert summarizes a recent ruling [1] of the Supreme Court (SC). The Court, while disposing of the batch appeals, allowed all taxpayers an opportunity to claim a transitional credit under GST, in cases where the same could not be claimed earlier.

SC has issued directions as follows: 

• Common Portal to be opened between 1 September 2022 to 31 October 2022 for filing Forms TRAN-1 and TRAN-2 to avail transitional credit.
• Any aggrieved registered taxpayer can file/revise the said forms, irrespective of whether the taxpayer had filed a writ petition before High Court (HC) or whether the Information Technology Grievance Redressal Committee (ITGRC) has decided the taxpayer case.
• Goods and Services Tax Network (GSTN) to ensure that there are no technical glitches during the relevant period.
  
• Concerned officers to verify the claims and pass appropriate orders on merit, after granting taxpayers the opportunity of being heard, within 90 days. Thereafter, transitional credit is to be reflected in the Electronic Credit Ledger.
  
• GST Council may issue appropriate guidelines for field formations to scrutinize the claims. 
  

Comments

• Allowing one-time window to claim transitional credit is a taxpayer friendly move and has put to rest the dispute on time limit aspect for availment of transitional credit. 
• Earlier, some High Courts had allowed credit transition in certain cases through re-opening of a common portal or claiming it in Form GSTR-3B.  
• It may be critical for taxpayers to review past claims for credit transition and assess the requirement to file revised transition forms. 
• Clarification from Central Board of Indirect Taxes (CBIC) on certain open issues relating to transition of credits will facilitate proper availment of credits under GST and help in avoiding undue litigation.

[1] TS-369-SC-2022-GST