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Are you ready for "Round 2" of TRAN-1/2?

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Are you ready for "Round 2" of TRAN-1/2?
Navjot Singh By: Navjot Singh
September 13, 2022
All Articles by: Navjot Singh       View Profile
  • Contents

Brief Background

Initially, TRAN-1 and TRAN- 2 forms were brought to allow assessees to carry forward pre-GST credits to the GST system. As per the GST Rules, such claims had to be filed within 90 days. Now due to various reasons, the assessees could not file the claims within the stipulated period, which led to chaos, and HCs were flooded with numerous Writs.

Though, we have seen different interpretations of Section 140 by different authorities. Also, the question of "Vested Right over said transactional credit" and "Time Period for filing the TRAN-1/ 2 forms" remains still unanswered. Be it  ADFERT TECHNOLOGIES PVT. LTD. VERSUS UNION OF INDIA AND ORS. [2019 (11) TMI 282 - PUNJAB AND HARYANA HIGH COURT],  M/S SIDDHARTH ENTERPRISES THROUGH PARTNER MAHESH LILADHAR TIBDEWAL VERSUS THE NODAL OFFICER [2019 (9) TMI 319 - GUJARAT HIGH COURT] ,  THE NODAL OFFICER VERSUS THE GOODS AND SERVICE TAX COUNCIL (GST COUNCIL) THROUGH OFFICE OF GST COUNCIL SECRETARIATE [2020 (2) TMI 1240 - GUJARAT HIGH COURT], M/S. SHREE MOTORS, (PROPRIETOR PRADEEP CHOUDHARY) VERSUS UNION OF INDIA, THE GOODS AND SERVICE TAX COUNCIL (GST COUNCIL) , GOODS AND SERVICE TAX NETWORK (GSTN) , CENTRAL BOARD OF INDIRECT OR TAXES AND CUSTOMS, ASSISTANT COMMISSIONER, OFFICE OF CENTRAL GOODS AND SERVICE TAX AND GAURAV INDUSTRIES VERSUS GST COUNCIL SECRETARIAT, COMMISSIONER, CGST COMMISSIONERATE, ASSISTANT COMMISSIONER, CGST DIVISION-D, RANGE PALI [2020 (3) TMI 728 - RAJASTHAN HIGH COURT] and ROHAN DYES & INTERMEDIATES LTD. VERSUS UNION OF INDIA [2020 (3) TMI 979 - GUJARAT HIGH COURT], wherein HCs have affirmed the views of "Vested Right" and took a view that Rule 117 can not take away the indefeasible right.

Further, After the positive order BRAND EQUITY TREATIES LIMITED, MICROMAX INFORMATICS LTD., DEVELOPER GROUP INDIA PRIVATE LIMITED, RELIANCE ELEKTRIK WORKS VERSUS THE UNION OF INDIA AND ORS. [2020 (5) TMI 171 - DELHI HIGH COURT], the government came up with a retrospective amendment. However, Delhi HC in the matter of SKH Sheet Metal Components gave a positive view over Vested right on "Credit" despite of retrospective amendment.

As a relief to several assessees who missed the statutory deadline, the Supreme Court has directed the Goods and Services Tax Network (GSTN) to allow a 2-month additional window. Thus, the Government has come up with a Circular stating various key points with respect to procedure/conditions for filing TRAN-1/ 2.

Guidelines for the applicant for filing TRAN-1/TRAN-2 or revising earlier filed TRAN-1/TRAN-2

  • The option of filing or revising TRAN-1/TRAN-2 on the common portal during the period from 01.10.2022 to 30.11.2022 is a last-time opportunity for the applicant.
  • The applicant may file the declaration in FORM GST TRAN-1/TRAN-2 or revise the earlier filed TRAN-1/TRAN-2 through DSC or EVC.
  • If the assessee is revising TRAN-1/TRAN-2, a facility for downloading the TRAN-1/TRAN-2 will be available.
  • A declaration in the format as given in Annexure ‘A’ of the circular will also be filed along with TRAN-1/2.
  • The applicant claiming credit in Table 7A of FORM GST TRAN-1 on the basis of Credit Transfer Document (CTD) shall also upload on the common portal the pdf copy of TRANS-3, containing the details in terms of Notification No. 21/2017-CE (NT) dated 30.06.2017. {Table 7A: - Where duty paid invoices or any other document are available; Details of the inputs held in stock in terms of sections 140(3), 140(4)(b), and 140(6)}
  • No claim for transitional credit shall be filed in Table 5(b) & 5(c) of FORM GST TRAN-1 in respect of such C-Forms, F-Forms, and H/I-Forms which have been issued after 27.12.2017.
  • Where the applicant files a claim in FORM GST TRAN-2, he shall file the entire claim in one consolidated FORM GST TRAN-2 by mentioning Last month in the "Tax Period Column.
  • Submitted Application along with Declaration/TRAN-3 will be submitted to Jurisdictional Officer within 7 Days.
  • Assessee can edit details before clicking the "SUBMIT" button, if pressed earlier then details punched will not be allowed to edit/modify.
  • If the assessee had filed TRAN-1/ 2 earlier and during the scrutiny of the claim, the officer rejected the whole/part of the claim, then that assessee will not be allowed to avail of this opportunity. He may approach for appeal/Writ.
  • After filing the claim, the Officer shall pass an appropriate order, accordingly, the Credit will be reflected in the Electronic Credit Ledger.

Few Doubts even after guidelines...

  • The ambiguous language of Section 140 may lead to a situation, wherein a dispute over "Eligible Credit" may arise. As in cases where the credit was not reflected in the ER-1/ST-3/VAT Returns, then it will be allowed? The fight is not over yet. But yes, now we have a chance to fight it again.
  • New System for filing TRAN-1/ 2 will be free from technical glitches?
  • What if the assessee took the transitional credit in GSTR-3B? and which has not yet been scrutinized by the GST Department.
  • Now, the opportunity is given to the assessee after almost 5 years, whether the assessee is eligible for Interest also?
  • Since the onus is on Officer to pass an opposite order, afterward the credit will be reflected. Now we all know the ground-level situation. Now the assessees having registration under Central Laws but migrated/allowed State Tax Department may face difficulties.

CA. Navjot Singh

Lead Advisor - Indirect Tax ; Advisory & Litigation

 

By: Navjot Singh - September 13, 2022

 

 

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