Transition of ISD Credit to ECL under GST can be Availed during Re-Opening of Transitional Credit Window: Bombay HC issues Directions [Read Order]

A division bench of the Bombay High Court, while considering a bunch of petitions relating to the transition of ISL Credit to Electronic Cash Ledger (ECL) under the GST regime, held that the same can be availed during the re-opening of transitional credit window from 1^st September to 31^st October as per the Supreme Court decision last month.

Justices K. R. Shriram& Gauri Godse was considering petitions relating to the procedural difficulties / objections raised with regard to distribution and/or utilisation and/or eligibility of Input Service Distributor (ISD) credit of ServiceTax/excise duty under Section 140 of the CGST Act 2017.

The common objection of Respondent in this batch of Petitions is that ISD Credit cannot be transitioned directly into the Electronic Credit Ledger (ECL) maintained under the GST Regime. In view of the provisions of CGST Act, the ISD credit ought to have been distributed by the said ISD to its different units/offices before 1.07.2017 and thereafter the transferee unit/offices ought to have filed TRAN-1 to transition the said credit distributed to it by ISD, into their respective ECL.

Considering the recent judicial decisions including the Supreme Court ruling in Filco Trade, the Court issued the following directions;

(a) All Petitioners, through their 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 between 01.09.2022 to 31.10.2022 in terms of the Hon’ble Supreme Court’s order in Filco Trade (Supra)

(b) 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 not exceeding the ISD credit available with the ISD Petitioner

(c) The Central Board of Indirect Taxes and Customs (CBIC), keeping in mind the problems faced by various parties, to issue a clarification, after due deliberation, in relation to the distribution / reporting of ISD credit preferably within 21 days from the date this is Order is uploaded, keeping in mind the approach adopted by the Hon’ble Supreme Court of India in Filco Trade (Supra). Petitioners, may, if so advised, approach the CBIC in this regard.

(d) 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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