Page 29 - GSTL_18th June 2020_Vol 37_Part 3

TRANSITIONAL CREDIT IF NOT CLAIMED
IN TRAN-1, ARE THEY LOST FOREVER?
By
Kevin Shah
MANAGING PARTNER, KEVIN SHAH & ASSOCIATES

Upon introduction of the new tax regime of
Goods & Services Tax [GST] w.e.f. 1-7-2017, all the suppli-
ers/service providers/manufacturers/dealers, etc., mi-
grated from erstwhile regime of indirect taxation to the
new regime, i.e., GST. Under the GST regime, every regis-
tered person was required to file electronically FORM GST TRAN-1 concerning
availment of unutilised input tax credit of duties and taxes paid under the erst-
while tax regime. Further, appropriate rules were framed for its revision as per
the time and manner prescribed.
After several orders issued from time to time, 27th December, 2017 was
prescribed [Order No. 10/2017, dated 15-11-2017 read with Rule 117 of the CGST
Rules, 2017] as the last date for migrating Cenvat credit/Input Tax Credit [ITC]
of the erstwhile tax regime to the GST regime. Accordingly, the registered person
was required to file FORM GST TRAN-1 for such transfer. Technically, transition
credit can be availed in the manner prescribed [Section 140 of the CGST Act,
2017] under rules [Rule 117 of the CGST Rules, 2017]. On perusal of the rules, it
can be analysed that the instant rule attaches timelines with it which is beyond
the scope of the section as it merely states that rules will specify the manner of
filing whereas it nowhere speaks about any timelines. Accordingly, it appears
that the timelines so prescribed in the rules are ultra vires.
Accordingly, all such persons who could not transit their ITC into the
new GST regime for whatsoever reason knocked the doors of the Courts across
the country. There was chaos and more than 100 petitions were filed before each
High Courts in the country. From the perusal of numerous judgments, it can be
said that broadly there are two types of cases -

GST LAW TIMES  18th June 2020  29