What is the time-limit for filing GST TRAN-1?
That seemed to be one of the biggest GST procedural compliance issues, after the introduction of unravelling GST regime from 1st July, 2017. It’s most prominent reason being the importance of GST TRAN-1 for a business, as on the basis of this declaration, the eligible credit under the past tax regime is carried forward to GST regime.
Before we answer the above question, let us have a quick look at the provisions of GST law:
What is GST TRAN-1?
FORM GST TRAN-1, in a simple language, is a transition declaration in which the businesses (who are registered under GST) declare the eligible CENVAT Credit to be carried forward from the old regime to GST regime. Input Credit of central taxes like excise will be carried forward as CGST credit and that of State taxes like VAT will be carried forward as SGST credit of respective States, which can be used to discharge output GST liability.
Provisions as per GST Law
The legal provisions w.r.t. carry forward of transitional credit is governed by Section 140 of CGST Act, 2017 and the procedure of carry-forward of credit is specified by Chapter XIV of CGST Rules, 2017 (“CGST Rules”). Chapter XIV comprises of following Rules:-
Rule 117 – Tax or duty credit carried forward under any existing law or on goods held in stock on the appointed day
Rule 118 – Declaration to be made under section 142(11)(c) i.e. proportion of supply on which tax paid under past regime but supply made thereafter
Rule 119 – Declaration of stock held by a principal and job-worker
Rule 120 – Details of goods sent on approval basis
Rule 120A – Revision of GST TRAN-1 declaration
Subject Area of Confusion:
As per Rule 117 of CGST Rules, the time-limit for filing of GST TRAN-1 has been specified as 90 days of the appointed day (i.e. 1st July, 2017), which comes out to be 28th September, 2017. In the 21st meeting of GST Council, it was decided to extend the date of filing Form GST TRAN-1 from 28th September, 2017 to 31st October, 2017.
The Order (No. 349/58/2017-GST dated 18th Sept, 2017) was released by CBEC subsequent to GST Council meeting for extension of the time-limit. However, the same was issued under Rule 120A of CGST Rules, 2017. It meant that due date of revision of GST TRAN-1 has been extended to 31st October, 2017 and the due date of filing original GST TRAN-1 was not extended. This caused anxiety among the businesses to file GST TRAN-1 till 28th September, 2017 and especially among the big corporate houses, where ascertaining the correct amount for carry-forward is a voluminous task, owing to their vast area of operations. Representations were also filed with the Government over the ill-drafted notification.
Finally, CBEC issued Order (No. 349/58/2017-GST dated 21st September, 2017) under Rule 117 of CGST Rules, which is the primary section for carry forward of transitional credit. The said order extended the period of filing GST TRAN-1 till 31st October, 2017.
From the conjoint reading of the aforementioned two CBEC orders, it can be comfortably concluded that the original GST TRAN-1 can be filed till 31st October, 2017 and after submission, can also be revised once till 31st October, 2017.
However, the point to be noted is that no Order for extension of time limit has been issued w.r.t. Rule 118, Rule 119 and Rule 120 of CGST Rules. It implies, transitional credit w.r.t. goods sent to job-worker and goods sent on approval basis will be eligible, only where GST TRAN-1 has been filed w.r.t. such transactions till 28th September, 2017.
No doubt, the correction made by CBEC brought a big sigh of relief among the business community.