Are you ready for "Round 2" of TRAN-1/2?

Brief Background

Initially, TRAN-1 and TRAN-forms were brought to allow assessees to carry forward pre-GST credits to the GST system. As per the GST Rules, such claims had to be filed within 90 days. Now due to various reasons, the assessees could not file the claims within the stipulated period, which led to chaos, and HCs were flooded with numerous Writs.

Though, we have seen different interpretations of Section 140 by different authorities. Also, the question of "Vested Right over said transactional credit" and "Time Period for filing the TRAN-1/2 forms" remains still unanswered. Be it Adfert Technologies (P.) Ltd.[2019] 111 taxmann.com 27 (Punj. & Har.), Siddharth Enterprises v. Nodal Officer [2019] 109 taxmann.com 62 (Guj.), Nodal Officer v. GST Council[2020] 116 taxmann.com 132 (Guj.), Shree Motors v. Union of India[2020] 115 taxmann.com 344 (Raj.) and Rohan Dyes and Intermediates Ltd. v. Union of India[2020] 115 taxmann.com 387 (Guj.), wherein HCs have affirmed the views of "Vested Right" and took a view that Rule 117 can not take away the indefeasible right.

Further, After the positive order Brand Equity Treaties Ltd. v. Union of India[2020] 116 taxmann.com 415 (Delhi), the government came up with a retrospective amendment. However, Delhi HC in the matter of SKH Sheet Metal Components gave a positive view over Vested right on "Credit" despite of retrospective amendment.

As a relief to several assessees who missed the statutory deadline, the Supreme Court has directed the Goods and Services Tax Network (GSTN) to allow a 2-month additional window. Thus, the Government has come up with a Circular stating various key points with respect to procedure/conditions for filing TRAN-1/2.

Guidelines for the applicant for filing TRAN-1/TRAN-2 or revising earlier filed TRAN-1/TRAN-2

• The option of filing or revising TRAN-1/TRAN-2 on the common portal during the period from 01.10.2022 to 30.11.2022 is a last-time opportunity for the applicant.
• The applicant may file the declaration in FORM GST TRAN-1/TRAN-2 or revise the earlier filed TRAN-1/TRAN-2 through DSC or EVC.
• If the assessee is revising TRAN-1/TRAN-2, a facility for downloading the TRAN-1/TRAN-2 will be available.
• A declaration in the format as given in Annexure ‘A’ of the circular will also be filed along with TRAN-1/2.
• The applicant claiming credit in Table 7A of FORM GST TRAN-1 on the basis of Credit Transfer Document (CTD) shall also upload on the common portal the pdf copy of TRANS-3, containing the details in terms of Notification No. 21/2017-CE (NT) dated 30.06.2017. {Table 7A: - Where duty paid invoices or any other document are available; Details of the inputs held in stock in terms of sections 140(3), 140(4)(b), and 140(6)}
• No claim for transitional credit shall be filed in Table 5(b) & 5(c) of FORM GST TRAN-1 in respect of such C-Forms, F-Forms, and H/I-Forms which have been issued after 27.12.2017.
• Where the applicant files a claim in FORM GST TRAN-2, he shall file the entire claim in one consolidated FORM GST TRAN-2 by mentioning Last month in the "Tax Period Column.
• Submitted Application along with Declaration/TRAN-3 will be submitted to Jurisdictional Officer within 7 Days.
• Assessee can edit details before clicking the "SUBMIT" button, if pressed earlier then details punched will not be allowed to edit/modify.
• If the assessee had filed TRAN-1/2 earlier and during the scrutiny of the claim, the officer rejected the whole/part of the claim, then that assessee will not be allowed to avail of this opportunity. He may approach for appeal/Writ.
• After filing the claim, the Officer shall pass an appropriate order, accordingly, the Credit will be reflected in the Electronic Credit Ledger.

Few Doubts even after guidelines...

• The ambiguous language of Section 140 may lead to a situation, wherein a dispute over "Eligible Credit" may arise. As in cases where the credit was not reflected in the ER-1/ST-3/VAT Returns, then it will be allowed? The fight is not over yet. But yes, now we have a chance to fight it again.
• New System for filing TRAN-1/2 will be free from technical glitches?
• What if the assessee took the transitional credit in GSTR-3B? and which has not yet been scrutinized by the GST Department.
• Now, the opportunity is given to the assessee after almost 5 years, whether the assessee is eligible for Interest also?
• Since the onus is on Officer to pass an opposite order, afterward the credit will be reflected. Now we all know the ground-level situation. Now the assessees having registration under Central Laws but migrated/allowed State Tax Department may face difficulties.

Feel free to reach me at [email protected]/+91 99533 57999 in case any clarification/doubt or assistance in filing.