Furnishing or Revising Form TRAN-1 and TRAN-2 | Taxmann’s Guidance Note
- Blog|GST & Customs|
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- Last Updated on 15 September, 2022
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The Hon’ble Supreme Court has recently directed GSTN to open the portal for filing TRAN-1 and TRAN-2 for a period of 2 months starting from October 01, 2022. Based on the directions issued by the Supreme Court, the CBIC issued the guidelines providing the procedure for filing or revising such forms. In this article, Taxmann’s Research and Advisory Team has prepared a Guidance Note which would be relevant for CAs, Accountants in Service, Tax Professionals, etc.
Circular No. 180/12/2022 – GST Dated September 09, 2022
Summary
The CBIC has issued its guidelines providing the procedure for filing or revising Form TRAN 1 and TRAN 2. These guidelines are issued based on the directions given by the Hon’ble Supreme Court in the case of Filco Trade Centre1. In this regard, it has been directed that the GSTN portal shall be opened for a period of 2 months starting from October 01, 2022.
This document discusses the following important points:
(a) Directions given by the Supreme Court
(b) Procedure for filing / revising the TRAN-1 and TRAN 2
(c) Specific scenarios where these forms cannot be filed/revised (as provided in the guidelines); and
(d) Key points for filing and revising these forms
About Circular
Taking note of the various High Court Judgments allowing filing/revising Form GST TRAN-1 and TRAN-2 (hereinafter collectively referred to as ‘transitional forms’), theSupreme Court in the case of Filco Trade Center (supra) has given one time opportunity to all the taxpayers for filing/revising the transitional forms. The taxpayers who could not claim the transitional credits within the permissible time limit under the GST laws or had made any mistakes in filing such claims can now file or revise the transitional forms.
1. Directions by Supreme Court
The Supreme Court has directed the GSTN to open the portal and allow filing or revising transitional forms during the period between October 01, 2022 and November 30, 20222. The specific directions are summarized as under:
(a) All taxpayers are allowed to avail this opportunity: Any aggrieved registered assessee is entitled to file the relevant form/revise the already filed form irrespective of whether he has filed writ petition before the High Court or whether his case has been decided by IT Grievance Redressal Committee.
(b) GSTN to ensure no glitches on portal: The GSTN has been directed to ensure that there are no technical glitches on the portal during the said period.
(c) Authorities should verify the claim within 90 days: The concerned officers are given 90 days’ time limit from November 30, 2022 to verify the veracity of the claim/transitional credit and pass the appropriate orders thereon on merits after granting reasonable opportunity to the concerned parties. Thus the authorities are required to verify the cases latest by February 28, 2023.
(d) Amount to be credited in electronic credit ledger after verification: The allowed transitional credit is to be reflected in the electronic credit ledger after verification by the proper officer (the concerned officer has to pass the order within 90 days as discussed above).
(e) GST Council can issue guidelines for scrutinizing claims: The GST Council can also issue the appropriate guidelines to the field formations for scrutinizing the claims made by the taxpayers.
2. Procedure for filing /revising TRAN-1/TRAN-2
The procedure provided by the CBIC for availing the transitional credit by filing /revising transitional forms is sequentially summarized as under:
Step 1: Filing/revising TRAN-1 and TRAN-2 online on GSTN portal
The taxpayers are required to file/revise transitional forms online on the GSTN portal during the concerned period. While filing the form, the following few important points relating are required to be taken care of:
(a) Submit declaration in Annexure A: Along with such filing/revision, a declaration in Annexure ‘A’ (attached as annexure in the given Circular) is required to be uploaded on the GSTN portal in PDF format.
(b) Submit TRAN-3 in PDF form: Where credit is being claimed on the basis of the credit Transfer Document (‘CTD’), a copy of Form TRAN-3 in PDF form is required to be uploaded3.
(c) Consolidated TRAN-2 to be filed: Where a claim is being filed in Form GST TRAN-2, a consolidated credit is to be filed and not the period-wise credit as per the provisions of Rule 117(4)(b)(iii) of the CGST Rules. In the column ‘Tax Period’, the last month of the period for which the claim is made is to be mentioned.
(d) Utmost care and precaution to be taken while filing transitional forms: Guidelines has specifically highlighted that it is a one-time opportunity to file/revise the transitional forms. Therefore, utmost care and precaution should be taken while filing the forms. No further opportunity would be available to file or revise transitional forms again.
(e) No editing once the form is submitted: The form cannot be edited or revised once submitted (i.e. once the submit button is clicked). The GSTN will issue a detailed advisory in this regard and the same should be referred to while filing the transitional forms.
(f) Not required to be filed by all persons: Taxpayers who have successfully filed the transitional forms and do not wish to make a change in the same are not required to submit the forms again during this period.
Step 2: Copy of documents to be submitted to GST authorities within 7 days
The applicant shall submit a copy of following documents to the jurisdictional tax officer within 7 days of filing the declaration in FORM TRAN-1/TRAN-2 on the GSTNportal:
(a) Downloaded TRAN-1/ TRAN-2 along with self-certified copy of the same
(b) Copy of Annexure A
(c) Copy of TRAN-3, wherever applicable
(d) Other documents/records/returns/invoices as required by the proper officer to support their claim of transitional credit
In terms of the Supreme Court directions, the department would be required to complete the verification within 90 days. Notably, the CBIC guidelines has not provided that whether the order should be in writing and whether the same should be available to the taxpayer.
Step 3: Credit of claim in Electronic credit ledger after verification by proper officer
The claim filed is subject to verification by the proper officer. After the verification of the claim, the jurisdictional tax officer will pass appropriate order thereon on merits after granting a reasonable opportunity of being heard to the applicant. Post this, the amount of claim would be credited to the electronic credit ledger.
3. Scenarios where filing /revising transitional forms is not allowed: CBIC Guidelines
The guidelines issued by the CBIC provides the specific scenarios wherein the transitional credit cannot be claimed during this period through the transitional forms:
(a) Transitional credit in respect of statutory forms issued after December 27, 2017: Claim of the transitional credit would be restricted in respect of such C-Forms, FForms and H/I-Forms that have been issued after the due date prescribed for submitting the declaration in Form GST TRAN-1 i.e. after 27-12-2017.
(b) Where authorities rejected the claim: In cases where the authorities have rejected the claim, no filing/ revision of the TRAN forms is to be done. An appeal is needed to be filed against such an order.
(c) Adjudication/appeal proceedings pending: In cases where adjudication or appeal proceedings against rejection of transitional credit is pending, a fresh filing/revision of transitional credit forms is not to be done.
4. Important points for filing transitional forms
The following are a few important transitional points that one should keep in mind while furnishing/revising Form TRAN-1 and TRAN-2 in pursuance to the directions of SC and the CBIC Circular:
|
S. No. |
Particulars |
| 1. | Closing balance of Cenvat Credit / Input tax credit of VAT can be carried forward under the GST regime. Hence, eligible credit available in the last return filed for Service Tax, Central Excise and VAT should be referred. |
| 2. | In case VAT credit is carried forward, pending statutory Form C / F / H should have been collected within 90 days (plus extension if any under Rule 12 of CST Rules) of the GST implementation. Else, the carried forward credit will be proportionately reduced.
The credit pertaining to the above forms submitted later is eligible for refund (i.e. transitioned credit is not allowed in such case). Note: The guidelines have provided an additional condition that the forms must not have been issued after the last date of filing TRAN-1 (December 27, 2017). This additional condition would invite litigation as many taxpayers did not have such forms on the last date of filing TRAN-1 and the state authorities were not allowing the refund as well even after completion of the assessment (arguing that the claim should be filed under GST instead of refund under VAT laws). |
| 3. | PLA balance is not allowed to be carried forward to the GST regime. Such amount available should be claimed as refund. |
| 4. | Availment of credit for traded stocks in hand as on the transition date is to be claimed based on the excise invoice / bill of entry (not older than 12 months). Else, deemed credit will be available for such traded stocks (sold within 6 months from GST introduction) – Applicable only for trading entity / trading operations/Depots.
Note: The condition that invoices/bill of entry should not be older than 12 months was held as unconstitutional by the Gujarat High Court [2018] 97 taxmann.com 314 (Gujarat), however, the Bombay High Court held otherwise [2018] 92 taxmann.com 131 (Bombay). Thus, the credit eligibility of invoices older than 12 months should be explored. |
| 5. | Transitional credit on the capital goods-in-transit as on the implementation date and received thereafter is not allowed. Hence, the credit of in-transit capital goods booked in the books of accounts on or after July 01, 2017 is not allowed. |
| 6. | Credit of service tax paid under the reverse charge after July 01, 2017 cannot be claimed. The possibility of claiming the refund of such tax paid under the GST regime should be explored.
Reference in this regard can be made to the following cases where refund has been allowed: (a) [2021] 133 taxmann.com 328 (New Delhi – CESTAT) (b) [2021] 133 taxmann.com 327 (Chennai – CESTAT) |
| 7. | Transition credit on the invoices of vendors, providing the services under forward charge, received after July 30 is not available. |
| 8. | CVD/SAD etc. paid under the GST regime due to de-bonding/failure to meet the export obligation etc. under GST cannot be claimed in Form TRAN-1/TRAN-2. The possibility of claiming refund of such tax paid under the GST regime should be explored.
Reference in this regard can be made to [2022] 142 taxmann.com 189 (New Delhi – CESTAT) allowing refund to the taxpayer. |
| 9. | Credit of Education Cess, Secondary Higher Education Cess and Krishi Kalyan Cess is not allowed to be transitioned. Refund eligibility of the same should be explored.
Reference in this regard can be made to the following cases where refund has been allowed: (a) [2022] 140 taxmann.com 207 (Chennai – CESTAT) (b) [2022] 140 taxmann.com 380 (New Delhi – CESTAT) (c) [2021] 132 taxmann.com 165 (Ahmedabad – CESTAT) |
| 10. | Taxpayers who have claimed transitional credits in Form GSTR-3B, based on the facts and status of such claim made, should also explore an opportunity to file Form TRAN-1. |
Note: Views taken in this document are for guidance purposes and cannot be construed as legal advisory. In case of any clarification or seeking specific guidance, feel free to reach us out at connect@taxmann.com.
1. UOI vs Filco Trade Centre [2022] 140 taxmann.com 535 (SC) dated July 22, 2022
2. Earlier Supreme Court has directed to open the GSTN portal for the period September 01, 2022 to October 31, 2022. Later, vide [2022] 142 taxmann.com 89 (SC)[02-09-2022] this period was extended for further four weeks.
3. Containing details in terms of notification no 21/2017-CE (NT) dated 30-06-2017
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