The Bombay High Court allowed to file GST TRAN-1 regard to distribution and eligibility of ISD credit of Service Tax, and thereby granting relief to Nuvoco Vistas Corporation Ltd, the petitioner
The present petition has been filed in relation to the procedural difficulties or objections raised with regard to distribution and eligibility of Input Service Distributor (ISD) credit of Service Tax under Section 140 of the CGST Act 2017.
When petitioner attempted distribution of credit transitioned or reporting of the distributed credit by the ISD registration to their units or offices. However, they were not able to distribute or recognise and report the distribution, as there were procedural and functional difficulties in relation to the GST forms and portal.
The objections raised by the respondent stated that the petitioner has wrongly migrated the erstwhile ISD registration to the GST regime and transitioned the credit which is prohibited as per the CGST Act, 2017. ISD registration under the GST regime does not enjoy the status of an assessee obtaining registration under GST for carrying out its business.
The objections also stated that the ISD registered under GST is not eligible for ITC under Section 16 of CGST, 2017 as it is not using the inputs in the course of or furtherance of its business for making taxable supplies as ISD can neither be transitioned directly into the Electronic Credit Ledger (ECL) maintained under the GST regime and the petitioner has erred in comparing the erstwhile ISD with the normal Service Tax assessed in light of Section 140 read with Rule 39 of the CGST Rules.
A Bench consisting of Justice KR Shriram and Justice AS Doctor observed that “The petitioner, through its respective units/offices registered under CGST Act and/or State Acts, as the case may be, can avail this window and file GST TRAN-1/revised GST TRAN-1 at the units/offices. The GST TRAN-1/revised GST TRAN-1 filed by the units/offices will be basis the manual ISD invoices issued/to be issued by ISD of petitioner subject to aggregate credit cumulatively not exceeding the ISD credit available with petitioner of Rupees Thirteen Crores Forty Three Lakh Nine Two Thousand and Nineteen.”
The Court also directed 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.
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