Page 58 - GSTL_23rd July 2020_Vol 38_Part 4

J116 GST LAW TIMES [ Vol. 38
Time-limit for availing transitional credit under GST is
mandatory, says Madras HC
The Madras High Court has ruled that the time-limit for availing transi-
tional credit is mandatory and not directory. This is just opposite to the Delhi
High Court’s order of May 5 which has been stayed by the Supreme Court.
Transitional credit refers to use of Tax Credit accumulated upto June 30,
2017, that is, the last day of the erstwhile Central Excise and Service Tax regime.
After the introduction of Goods & Services Tax (GST), a special provision was
made for credit accumulated under VAT, Excise Duty or Service Tax to be trans-
ited to GST.
However, there were some conditions set. The credit will be available
only if returns for the last six months — from January, 2017 to June, 2017 — were
filed in the previous regime (that is if VAT, Excise and Service Tax returns had
been filed).
And Form TRAN-I (to be filed by registered persons under GST, may be
registered or unregistered under the old regime) has to be filed by December 27,
2017, to carry forward the Input Tax Credit. After many changes, the Govern-
ment extended date for submission of the declaration electronically in required
form by March 31, 2020.
Due to various reasons, a number of assessees who could not file the
form by due date and were denied credit went to various High Courts. Here the
petitioner PR Mani Electronics, a retail trader of mobile phones, electrical and
electronic items, said it is entitled to avail Transitional Credit of nearly ` 4.70
lakh. Its application could not be filed electronically and then a hard copy was
submitted to the Tax Authority which acknowledged it. However, after that
there was no response.
The Court made a reference of Section 16(4) of the CGST Act which says,
“A registered person shall not be entitled to take Input Tax Credit in respect of
any invoice or debit note for supply of goods or services or both after the due
date of furnishing of the return under Section 39 for the month of September fol-
lowing the end of the financial year to which such invoice or debit note pertains
or furnishing of the relevant annual return, whichever is earlier.”
It said this provision is indicative of the legislative intent to impose time
limits for availing ITC. Besides, Section 19(3)(d) of the TNVAT Act itself imposed
a time-limit for availing ITC and further provided that it would lapse upon expi-
ry of such time-limit.
The Court said that ITC has been held to be a concession and not a vest-
ed right. In effect, it is a time-limit relating to the availing of a concession or ben-
efit. If construed as mandatory, the substantive rights of the assessees would be
impacted; equally, if construed as directory, it would adversely impact the Gov-
ernment’s revenue interest, including the predictability thereof. “On weighing all
the relevant factors, which may not be conclusive in isolation, in the balance, we
conclude that the time-limit is mandatory and not directory,” the Court conclud-
ed and dismissed the petition.
[Source : https://www.thehindubusinessline.com, dated 19-7-2020]

GST LAW TIMES  23rd July 2020  58
( A116 )