GST Rulings

Evidence not necessary to prove technical glitch in GST TRAN-1 filing

The CENVAT credit / input tax credit carried forward in the last return filed under the erstwhile laws (viz., central excise / service tax / VAT) could be transitioned to the GST regime. However, this is subject to certain conditions laid under Section 140 of the CGST Act, 2017. For this purpose, assessee was required to file a declaration in Form GST TRAN-1. The last date for filing the said Form (including any revision thereon) was December 27, 2017.

Many assessees, however, faced technical difficulty in filing the Form. While some of them approached the jurisdictional authorities for redressal, quite a few did not. Meanwhile, Circular No.39/13/2018-GST dated April 03, 2018 was issued, mandating the taxpayers to furnish evidence of technical glitch. Again, while some had evidence of technical glitch, quite a few did not possess such evidence.

Soon thereafter, Rule 117 (1A) of CGST Rules, 2017 was ushered in. Vide the said Rule, some of the registered persons (who had approached the authorities with evidence) were allowed relief with an extended due date (of March 31, 2020) for filing the Form. Hence, the aggrieved parties approached the judiciary.

Addressing a bunch of writ petitions, the Hon'ble High Court of Allahabad^[1] observed that there was no necessity under either the Act or the Rules to furnish evidence of attempt(s) to submit Form GST TRAN-1 or TRAN-2. Rather, this was done vide the aforesaid Circular. Consequently, such action is arbitrary and unenforceable.

It also observed that Circulars are issued to give effect to law, by making it practical and functional. However, in the instant case, the Circular travels beyond the statute. Enforcement of such Circular would result in great discrimination between taxpayers merely on the chance occurrence of being in possession of evidence to submit / revise the aforesaid Forms (especially when there is no such requirement under law).

While a taxing legislation and equity considerations may be at loggerheads, the Court cannot be unmindful of consequences relating to a merely procedural requirement. If only the taxpayers were offered a functional system, they would not have been deprived of the transition credit.

In view of the foregoing, it held that a one-time reasonable opportunity should be granted to all taxpayers (in Uttar Pradesh) to submit / revise / re-revise Form GST TRAN-1 or TRAN-2 electronically.

[1] Order dated September 15, 2021 arising from Writ Tax Nos. 872 of 2018 and 225, 477 of 2021

Srinivasan V, Advocate