GST Transitional Credit Issues: 50th GST Council Meeting Clarifies Special Procedure to enable manual filing of Appeal for TRAN-1/TRAN-2 claims

The Union Finance Minister Nirmala Sitaraman presided over the 50th meeting of the GST Council on 11th July 2023 at Vigyan Bhawan in New Delhi including Revenue Secretary, CBIC chairman.

The 50th GST council proposes to introduce Special procedure under section 148 of Central Goods and Services Tax Act, 2017 to enable manual filing of appeal against the orders passed by proper officers in respect of TRAN- 1/ TRAN-2 claims of the registered persons, filed in pursuance of the directions of Hon’ble Supreme Court in case of the Union of India v/s Filco Trade Centre Pvt. Ltd.

The GST form TRAN-1 is designed for taxpayers who were registered under the previous tax schemes and are now transitioning to the Goods and Services Tax (GST) system. By filing the GST TRAN-1 (Transition 1) form, these taxpayers can seek reimbursement for the input tax credit on their previous stock purchases made before the GST came into effect.

The GST form TRAN-2, also known as Transition 2, is submitted by registered taxpayers who qualify to receive credit in the Electronic Cash Ledger for eligible duties and taxes paid on inputs in the previous tax regime before the implementation of the Goods and Services Tax (GST).

In the case of Union of India v/s Filco Trade Centre Pvt. Ltd., the Supreme Court issued following directions:

1. Goods and Service Tax Network (GSTN) is directed to open a 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.
2. 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).

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

4. 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.

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

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

The GST council has clarified that to issue special procedures on the TRAN-1/TRAN-2 claims based on the judgment of the supreme court.

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