In a relief to BMW, the Telangana High Court directed the Goods and Service Tax (GST) Official to transit the credit into an electronic credit ledger in Form GST PMT-2 maintained on the portal.
The petitioner, BMW India is into the business of non-banking financial companies engaged in financing automobiles in the form of loans and financial leases to its customer and has operations in 14 States across India, including in the State of Telangana. For the purposes of carrying on business in the State of Telangana, the petitioner obtained registration under the provisions of the Telangana State Value Added Tax Act, 2005, as well as under the provisions of the Finance Act, 1994, for the purpose of service tax payable on leasing activity.
The Petitioner claimed that it had paid the service tax on the 10% interest portion of leasing contracts under the provisions of Finance Act, 1994, which were entered into before the introduction of the GST Act, 2017. Similarly, it is also claimed that 100% of the VAT on the entire value of lease rentals receivable, is paid upfront in the first month of entering into the contract itself under the relevant provisions of the TVAT Act, even though the tenure/ term of lease/rental contracts are spread over a period of time.
The petitioner claimed that with the introduction of CGST and SGST Act, 2017, having regard to the provisions of the CGST Act and the SGST Act and the Rules made thereunder, the petitioner became entitled to avail the transitional VAT credit in a sum of Rs.21,07,574/-, in respect of a lease or rental contracts or agreements, where the tenure/term is continuing post introduction GST w.e.f. 01.07.2017, as the petitioner is now required to discharge a liability under the GST Act, 2017.
The petitioner contends that it had, in terms of the provisions of the CGST Act and the SGST Act read with the Rules made thereunder, declared an amount of Rs. 21,07,574/- as transitional credit in Form GST TRAN-1, by uploading the same electronically on GST portal through GSTN Network, as mandated under the Act and the Rules, being the last date notified under Rule 117 of CGST Rules.
The division bench of Justice M.S. Ramachandra Rao and Justice T.Vinod Kumar considered the decision of Bombay High Court in the petitioner’s own case in a similar issue of transitional credit of Rs.17,07,673/- claimed through TRAN-1 filed not being transitioned into the petitioner’s electronic credit ledger despite successful filing.
The court held that as the various activities under GST are technology-driven, and given the fact that there exists no seamless connectivity between a taxpayer and the respondent network, and a taxpayer is required to go through various intermediate service provides, more so in the initial stage of implementation by migrating from the existing system of indirect taxation, it would be highly improbable to expect the transition to be smooth and without glitches as being claimed by the respondents.
Therefore, the court directed the respondents to transition the credit of the amount of Rs. 21,07,574/- claimed by the petitioner, into petitioner’s electronic credit ledger in Form GST PMT-2 maintained on the portal, within a period of four weeks from the date of the order.
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