The Delhi High Court ruled that Genuine mistakes in filling up the correct details of credit in TRAN-1 Form did not preclude taxpayers from claiming Input Tax Credit (ITC).
The Petitioner, R.R. Distributors Private Limited, is engaged in the trading of paper and other like goods. It migrated from the Delhi Value Added Tax Act, 2004 into the GST regime, and as on the appointed date under the GST laws, it had a closing stock of finished goods of Rs.7,44,41,433/- on which it was entitled to claim transitional input tax creditin terms of Section 140(3) of the CGST Act, 2017. Accordingly, the petitioner filed the statutory TRAN-1 Form for transitioning ITC of Value Added Tax of Rs. 23,57,203/- under the DGST Act, 2017. On 27th December, 2017, an additional claim of State tax of Rs. 59,433/- was made and transitional ITC of Rs. 52,166/- was claimed under the Act. For claiming the ITC on the stock of Rs. 7,44,41,433/-, Petitioner filed TRAN-2 Form for which no date had been specified under Rule 117(4)(b)(iii) of the CGST Rules, 2017. On 4th January, 2018, the Petitioner attempted to file the TRAN-2 Form for availing the transitional credit amounting to Rs. 17,35,293/- on the above stock under the proviso to Section 140(3) of the Act read with Rule 117(4) of the Rules.
On the same date, the Petitioner informed GSTN about the non- acceptance of TRAN-2 Form via email, however, no response has been received till date.
Mr. Rajesh Jain, the counsel for the Petitioner submitted that when the TRAN-1 Form was filed online, the facility to upload TRAN-2 Form was not available on the common portal. In these circumstances, the Petitioner was advised by his consultant that since its claim fell under proviso to sub-Section 140(3) of the Act, it needed to file the TRAN-2 Form as per Rule 117(4) of the Rules. Unlike Rule 117(1) which prescribed the initial time period of 90 days with further extensions by the Commissioner on the recommendation of the GST Council, initially no time period was specified for Rule 117(4)(b)(iii).
Mr. Jain further submitted that the respondents are not permitting the Petitioner to upload TRAN-2 Form on account of an inadvertent error committed by it in filing TRAN-1 Form, since it was not able to show the available stock of goods as on 30th June, 2017 in part 7B of table 7(a) and table 7(d) of TRAN-1 Form. After TRAN-1 Form was filed on 27th December, 2017, the portal got locked, thereby preventing the taxpayers from viewing/amending the TRAN-1 Form, and thus, no revision was possible. In these circumstances, when the Petitioner attempted to upload TRAN-2 Form it received the response as noted above, in para 4. The Petitioner was thus prevented, for reasons beyond its control and comprehension, to take transitional credit of CENVAT in accordance with the proviso to Section 140(3) of the Act.
Despite opportunity granted, no counter-affidavit has been filed on behalf of the Respondents. However, the counsels appearing for the Respondents controverted the contentions urged by the Petitioner and submit that the mistake committed by the Petitioner cannot be remedied. Since the Petitioner had given incorrect particulars while filing TRAN-1 Form 1, cannot be permitted to file TRAN-2 Form online.
The division bench of Justice Sanjeev Narula and Justice Manmohan ruled that inadvertent and genuine mistakes in filling up the correct details of credit in TRAN-1 Form should not preclude taxpayers from having claims examined by the authorities in accordance with the law. This Court has consistently been issuing directions to the Respondents and granting relief to such taxpayers. When the Petitioner attempted to upload TRAN-2 Form, it was prevented to do so because of the error committed by him while making the declaration in the TRAN-1 Form, however, the system did not enable the Petitioner to revise TRAN-1 Form on the system.
“In our view, the non-filing of part 7B of table 7(a) and table 7(d) of TRAN-1 Form cannot impair the rights of the petitioner to claim transitional ITC, if he is otherwise eligible. This Court has observed in numerous decisions that the GST system was in a trial-and-error phase as far as its implementation was concerned and ever since GSTN network became operational, taxpayers genuinely faced difficulties in filing the returns and input tax credit in the GST portal. Acknowledging the procedure and difficulties in claiming an input tax credit, this Court and several other High Courts have granted relief to such taxpayers. Failure on the part of the Petitioner to give relevant details in TRAN-1 Form can only be taken as a procedural lapse which should not cause any impediment to its right to claim transitional ITC,” the court said.
The court directed the Respondents to either open the online portal so as to enable the Petitioner to file the rectified TRAN-1 Form electronically or accept the same manually with necessary corrections, on or before 30th June 2021. The Petitioner will thereafter be permitted to correspondingly file the TRAN-2 Form which also shall be accepted either electronically by opening the online portal, or manually.
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