29 July 2022
Supreme Court order to reinstate TRAN facility
A recent order passed by the Supreme Court in the matter of availing transitional ITC through reinstating TRAN filing facility in the case of Union of India vs Filco Trade Centre Pvt. Ltd. We have encapsulated the synopsis of the order below:
  • The GSTN Portal would be kept open to availing 'transitional credit' through filling Form TRAN-1 and TRAN-2 for two months between 1 September 2022 to 31 October 2022.
  • The benefit will be extended to all GST assesses (registered) to file relevant forms or revise the already filed form irrespective of whether the taxpayer has filed writ petitions or the case has been decided by Information Technology Grievance Redressal Committee (ITGRC).
  • GSTN has been directed to ensure that there are no technical glitches on the portal during the said period.
  • Concerned officers will have 90 days' time to verify the Transition form filed by the taxpayers and pass the order on merits by providing an opportunity of being heard.
  • On satisfaction of the claim by concerned officers, the transition credit will be credited to the electronic credit ledger on the GSTN portal.
  • As per instructions in order, GST Council is directed to issue suitable guidelines for the aforesaid if required.

Our Comments
  • This is a welcome decision as it will put an end to a number of pending litigations related to carry forward of the existing pool of VAT and Central Value Added Tax (CENVAT) credit lying in the books.
  • The Supreme Court's order disposes off a batch of 400 appeals and provides a huge respite to all the taxpayers. The order not only benefits the taxpayers who had litigated the issue but also provide relief to every registered taxpayer who was impacted. They will now be able to avail this opportunity so that loss of credit can be avoided.
  • Companies desirous of availing this facility are recommended to prepare backup documents supporting the ITC to be claimed in TRAN-1 and/or 2 to avoid hassles at the time of scrutiny by officers.
  • Separately, the companies will need to be mindful of the implications that such adjustment would have in their books of accounts from an accounting and tax perspective, specifically in cases where such ITC was not transitioned and written off in the books of accounts of the company.
  • To ensure uniformity in the procedure and avoid undue litigation stemming from the verification process, it may be expedient for the GST Council/CBIC to prescribe proper guidelines in this regard.
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