At the time of implementation of the GST, the CGST Act 2017 (Section 140 read with the rules) had allowed the taxpayer a period of 90 days (which was further extended till 27.12.2017) to claim the input tax credit pertaining to the previous regime under the GST by filing GST Trans 1 & Trans 2.
As we all know that many taxpayers have not filed the Trans 1 & the Trans 2 forms due to either not being aware of the said provisions or due to the technical glitches on the GST portal thereby resulting in losing the ITC which the taxpayer is rightly eligible for. Taking cognizance of the said situation and being the credit a vested right, the Hon’ble Supreme Court of India in the case of UOI vs. Filco Trade Centre Pvt. Ltd has directed the GSTN to open the forms Trans 1 and Trans 2 on the GST portal thereby granting the 2 months time starting from 01.10.2022 for the taxpayers to file the trans 1 & trans 2 and claim the credit which was missed by the taxpayers during the transmission from the past regime to the GST regime.
Thereby this is the final opportunity for the taxpayers to claim the credit pertaining to the previous period in the GST regime. In this article, an attempt is made to understand the circumstances under which the transitional credit can be claimed by the taxpayer.
The taxpayer can claim the credit of
1. The closing balance of credits lying in the Service Tax, Excise, VAT Returns
2. The Capital Goods (Balance 50% or 100% as the case may be);
3. Inputs, Semi-finished goods/ finished goods held in stock for the following category of taxpayers on which either Excise Duty or VAT has been suffered:
4. Manufacturers supplying goods exempted under Central Excise or under concessional rate scheme with no Cenvat;
5. Traders exempted from VAT or under concessional rate with no ITC;
6. The ITC on stock which was previously exempted and has now became taxable
7. Service Providers Providing exempted services or services under abatement with no Cenvat Credit;
8. Works contractor / Construction service provider under concessional / composition scheme in VAT or ST regime.
9. Further, the said credit can be claimed at 100 % If the taxpayer is in the possession of Physical Invoices or the tax paying document; if the Physical Invoices are not available for traders then the ITC can be claimed at the Standard rate of 40%/ 60% of the total credit.
10. Inputs or Input services in transit and recorded in the books of accounts within 30 days from the appointed date.
11. Distribution of transitional credit by the Input Service Distributor;
12. Transfer/ distribution of credit from the centralized registration;
13. Recredit of ITC reversed for non-payment of consideration within 3 months;
Declaration of the details of inputs, SFG, FG lying in stock for job work on the appointed date.
14. If the tax paid on supply is both under the VAT and Service tax, tax shall be leviable under the CGST Act and credit of VAT or ST paid is allowed under the GST law to the extent of supplies made after the 1st of July.
15. Goods sent on an approval basis not earlier than six months before the appointed day are rejected or not approved by the buyer and returned on or after the appointed day:
16. Where any goods or capital goods belonging to the principal are lying at the premises of the agent on the appointed day, the agent shall be entitled to take credit of the tax paid on such goods or capital goods subject to fulfillment of certain conditions.
Thereby it is advisable for all taxpayers to check if they are eligible for any such benefit and if they are eligible for the same do file the Trans 1 and the Trans 2 form at the earliest. Do remember this form needs to be filed with atmost care as once filed the said form cannot be amended or revised and upload all the supporting documents.
Special Thanks to Sanjana Gilda.
For any further information or clarification please feel free to contact CA Ajay Kumar Mundada on [email protected]
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