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Transitional Credit is the balance of CENVAT and Input Credit available with the assessee as on June 30, 2017 under the erstwhile laws e.g. Central Excise, Service Tax and State VAT. Transitional Credit also refers to the embedded tax in the closing stock of goods as on June 30, 2017. Upon introduction of GST, assessees were allowed to take credit of these balances by filing TRAN forms namely TRAN 1, TRAN 2 and TRAN 3. Once the TRAN forms were filed, the assessee was able to avail the credit in his Electronic Credit Ledger under GST and utilise it for payment for tax on outward supply. Section 140 of the CGST Act, 2017 read with rules 117 and 120A of CGST Rules, 2017 have enacted the provisions very elaborately.

The journey of the assessees in availing transitional credit was however not smooth. The assessees faced numerous problems and difficulties while filing TRAN forms. This led to multiple litigations in the matter in various forums. As a result, the Hon’ble Supreme Court, in the matter of Union of India vs. Filco Trade Centre Pvt. Ltd. vide its judgment in July 2022 had allowed one last opportunity to all the assessees to file/ revise their TRAN forms. The Apex Court directed the Goods and Service Tax Network (GSTN) to open the common portal for filing TRAN forms for two months i.e. w.e.f. 01.10.2022 to 30.11.2022.

The Government has issued a Circular No. 180/12/2022 dated 09.09.2022 vide which guidelines have been issued for the applicants for filing new TRAN forms or revising the already filed forms on the common portal. As per the Circular, the assessee upon filing the TRAN forms shall also download a copy of the same and submit a self-certified copy, along with a declaration, to the jurisdictional tax officer within 7 days of filing of form. The assessee shall keep all the requisite documents/ records/ returns/ invoices, in support of his claim of transitional credit, ready for making the same available to the concerned tax officers for verification.

It has been clarified that in cases where the credit availed by the applicant on the basis of TRAN forms filed earlier, has either wholly or partly been rejected, the appropriate remedy in such cases is to prefer an appeal against the said order or to pursue alternative remedies available as per law. Where the adjudication/ appeal proceeding in such cases is pending, the appropriate course would be to pursue the said adjudication/ appeal. In such cases, filing a fresh application is not the appropriate course of action.

The Transitional Credit claimed by the assessee shall be credited in his electronic credit ledger to the extent allowed by the jurisdictional tax officer through an order after carrying out the necessary verifications. The said verification has to be carried out within 90 days after completion of the above window of two months, i.e. within 90 days from 01.12.2022 i.e. upto 28.02.2023. The Government has issued a Circular No. 182/14/2022-GST dt. 10th November, 2022 on the Guidelines for verifying the Transitional Credit by the Jurisdictional Officer.

The verification of TRAN forms for assessees under Central jurisdiction shall be done by the Central Tax officers whereas those under the State jurisdiction shall be done by the respective State Tax officers. Principles of natural justice shall be followed in the process of passing the order relating to allowance or disallowance of the Transitional Credit which means that an opportunity of being heard shall be allowed by the jurisdictional officer before passing any adverse order. It has been clarified that there may be cases where the transitional credit claim, filed/ revised by the applicant, may have components of both central tax and state/UT tax. In such cases, where the applicant is under the jurisdiction of central tax officer and where the transitional credit claimed has component of state/ Union Territory tax also, the jurisdictional central tax officer shall refer the said claim for verification of component of state/UT tax to his counterpart state/UT tax officer and vice-versa.

The officer shall also check whether any adjudication or appeal proceedings in TRAN forms  related matter are pending/ concluded against the applicant. In such cases, where any adjudication or appellate proceedings have been initiated against the applicant in respect of TRAN forms, the officer should take a note of the relevant facts in the notice/ order and the grounds/ reasons for inadmissibility of transitional credit, if any, in the said notice/ order.

Upon completion of verification, the officer shall prepare a verification report specifying the amount of transitional credit which may be allowed to be credited to the electronic credit ledger of the applicant and the amount which is liable for rejection, along with detailed reasons/ grounds on which the said amount is liable to be rejected. In case, where the adjudication or appeal proceedings in respect of TRAN forms related matter are pending/ concluded against the applicant, the officer shall categorically bring out the relevant facts in his verification report along with his detailed findings, admissibility/ inadmissibility, reasons of inadmissibility thereof and the copy of the relevant notice and/or orders.

In case there is any part or full inadmissibility of the TRAN credit filed by the applicant, the officer shall issue a notice to the applicant preferably within a period of seven days from the receipt of report from the counterpart officer, seeking explanation of the applicant as to why the said credit claimed by him should not be denied wholly/ partly, as the case may be. The applicant shall also be provided an opportunity of personal hearing by the jurisdictional tax officer in such cases, as mentioned above. The officer shall finally pass a reasoned order specifying the amount of transitional credit allowed to be transferred to the electronic credit ledger of the applicant and upload a copy of the said order, on the common portal for crediting the amount of allowed transitional credit to the electronic credit ledger of the applicant. In any case, such order shall be passed within a period of 90 days from 01.12.2022 i.e. up to 28.02.2023.

It may be noted that where the amount credited to the electronic credit ledger pursuant to the originally filed TRAN forms exceeds the amount of credit admissible in terms of the revised TRAN forms filed by the applicant, such excess credit is liable to be demanded and recovered from the applicant, alongwith interest and penalty, in accordance with the provisions of Chapter XV of the Act and the rules made thereunder.

Thus, the assessees are advised to take this last and final opportunity w.r.t. transitional credit and file/ revise their respective TRAN forms within the last date of 30.11.2022.

Views expressed are personal of the author CA. Tarun Kr. Gupta. He can be contacted at

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One Comment

  1. opjain02 says:

    Whether Late fee & Penalty is leviable for Late submission Form GSTR-9C, which was earlier not submitted along with Form GSTR-9.
    CA Om Prakash Jain s/o J.K.Jain, Jaipur
    Tel 9414300730

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May 2024