Rectified TRAN-1 Form can be Filed for Distribution of Accumulated Credit of Pre-GST Regime: Kerala HC [Read Judgment]

Accumulated Credit - Kerala-High-Court- GST - Tax-Scan

In a recent case, the Kerala High Court held that the commissioner of central tax and central excise should permit to file a rectified TRAN-1 Form electronically or manually with the appropriate corrections for distribution of accumulated credit related to the pre- GST regime.

The writ petition was filed by the South Indian Bank Limited against the order issued by the commissioner of central tax and central excise rejecting the request of the petitioner to correct error which occurred while filing Form GST TRAN -1, on account of which the eligible credit under the earlier indirect tax laws could not be transferred to the petitioner in the GST regime. The application in Form GST TRAN -1 that was filed by the bank showed the registration number of the input service distributor that was obtained by it under the GST regime for the purposes of seeking a transfer of the accumulated credit to the respective branches.

The application was rejected by the respondents they submitted that the petitioner had erroneously shown the GSTIN related to the input service distributor instead of the GSTIN of the assessee to whom the credit had to be transferred. The said defect is stated to be non-rectifiable, and the respondent expressed its inability to assist the petitioner in the transfer of credit.  It is also submitted that the inability of the petitioner to provide the details of the purchase invoices, on the strength of which credit was taken under the erstwhile regime, is also cited as a reason for not entertaining the application submitted by the petitioner for transfer of credit. And also by virtue of Rule 117 of the CGST Rules, the last date for filing of TRAN -1 Form was expired, so the petitioners application for revision of TRAN -1 Form cannot be entertained and also the software used for permitting distribution of credit by the input service distributor has been built keeping in mind the distribution affected after the introduction of GST, and therefore, cannot be made applicable to distribution of accumulated credit pertaining to the pre- GST regime.

The High Court disposed of the case in the light of the decision of the Delhi High Court in Blue Bird Pure Pvt.Ltd. V. Union of India and Others [(2019) 68 GSTR 340(Delhi)]. In the instant case, the availment of credit by the petitioner, and its entitlement to distribute the credit to its various branches is not disputed so therefore the respondent should either permit the petitioner to file a rectified TRAN-1 Form electronically in favour of each of its branches in the country, or accept manually filed TRAN -1 Form with the appropriate corrections.

Justice A.K. Jayasankaran Nambiar while deciding the case observed that by considering the contention of the respondents regarding the technical difficulty in permitting assessees to transfer accumulated credit to the GST regime, the Department should either open the online portal so as to enable the assessee to file rectified TRAN -1 Form electronically or accept manually filed TRAN-1 Form with correction before a specified date so as to render justice to the assessees.

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