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1. Marking of 5 years of anniversary since the introduction of GST, the Supreme Court of India acknowledged the bottlenecks in the GST framework and provided one time opportunity of claiming transitional credit by way of a decision in the case of Filco Trade Center1 .

2. The Supreme Court of India while allowing the transitional credit made following observation.

I. Goods and Service Tax Network (GSTN) is directed to open common portal for filing concerned forms for availing Transitional Credit through TRAN-1 and TRAN-2 for two months i.e. w.e.f. 01.09.2022 to 31.10.2022.

II. Considering the judgments of the High Courts on the then prevailing peculiar circumstances, any aggrieved registered assessee is directed to file the relevant form or revise the already filed form irrespective of whether the taxpayer has filed writ petition before the High Court or whether the case of the taxpayer has been decided by Information Technology Grievance Redressal Committee (ITGRC).

III. GSTN has to ensure that there are no technical glitch during the said time.

IV. The concerned officers are given 90 days thereafter to verify the veracity of the claim/transitional credit and pass appropriate orders thereon on merits after granting appropriate reasonable opportunity to the parties concerned.

V. Thereafter, the allowed Transitional credit is to be reflected in the Electronic Credit Ledger.

VI. If required GST Council may also issue appropriate guidelines to the field formations in scrutinizing the claims.

From the above, it can be understood that the Courts have acknowledge the idea that GSTN suffered from technical glitches and also acknowledging the important concept that no arbitrary timelines can vacate ITC which has been validly availed in the law thereby achieving the core concept of GST i.e. seamless flow of ITC.


3. Historically, there are multiple decisions pronounced by various Supreme Courts and High Courts and on the subject matter of transitional ITC. Initially, the timelines prescribed under Rule 117 of the CGST Rules, 2017 was challenged wherein various High Courts2 upheld the said rule, thereby disallowing the claim of transitional ITC. Further, the Supreme Court/High Court in various decisions3 have been acknowledge the fact that transitional ITC should be allowed as disallowing ITC would lead to violation of Article 300A of the Constitution of India and that nobody shall be denied to carry toward legitimate claim of CENVAT/ITC on the ground of Non-Filling of FORM TRAN-1 by 27.12.2017.

4. Meanwhile, the argument that rules have acted far beyond the scope of act was corrected with retrospective amendment vide Finance Act, 2020 under the GST Act, 2017 w.e.f. 07.2017 so as to facilitate relevant rules, determine timelines for filing FORM TRAN-1.

5. Thus, the instant verdict has put an end to the history and provided a fresh chance thereby acknowledging the trade difficulty.

Actions for Taxpayers:

6. The taxpayers who could not claim transitional credit due to the technical glitch in the GST Portal can now file FORM TRAN-1 or FORM TRAN-2 as per the directions of the Hon’ble Supreme Court.

7. If the tax payers had made any technical, arithmetical or any other similar error or wrongful availment of ITC at the time of filing FORM TRAN-1 or FORM TRAN-2 the same can be revised. Accordingly, such registered taxpayers should perform all necessary calculations and file appropriate FORM TRAN-1 or FORM TRAN-2.

Actions to be taken by the Revenue Authority:

8. The Concerned Authority has been given 90 days’ time thereafter to verify the claim of transitional credit and passed a reasoned order after giving opportunity of being heard. Thereafter the ITC would be reflected in electronic credit ledger.

9. The CBIC department has to issue appropriate guidelines in order to scrutinize the said claims

Benefit for the taxpayers:

10. Taxpayers who have not filed FORM TRAN-1 or FORM TRAN-2 credit till now or those who have filed the said FORM TRAN-1 or FORM TRAN-2 incorrectly now can claim the said transitional credit. It is also beneficial to such class of person who have not preferred any litigation and the balance is lying as closing balance in the respective returns.

11. Further, any mistakes or wrong availment may be rectified however such rectification shall be subject to adjudication which has to be represented before the concerned authority.


12. The current Judgement is a welcome step to the trade at large as it will help business in revival during this tough time.


1 Union of India vs. Filco Trade Center [2022-TIOL-57-SC-GST]

2 Willowood chemicals Pvt. Ltd. Vs. Union of India [2018-TIOL-2873-HC-AHM-GST] and Nelco Limited vs. Union of India [2020-TIOL-641-HC-MUM-GST]

3 a. M/s Brand Equity Treaties Ltd. Vs. Union of India [2020-TIOL-900-HC-DEL-GST]

b. SKH Sheet Metal Components vs. Union of India [2020-TIOL-1031-HC-DEL-GST]

c. Union of India vs. Adfert Technologies Pvt. Ltd. [2020-TIOL-64-SC-GST]


In case of any clarification/queries, please feel free to contact the undersign:

CA. Kevin Shah Adv.M: +91-96642 94346


Adv. Deep ShahM: +91-99204 10008


CA. Rovin KothariM: +91-98203 37515


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April 2024