HC Sets Aside TRAN Credit Rejection – Orders Reconsideration

Case Details: Bhawar Life Style vs. Assistant Commissioner Central Tax [2026] 185 taxmann.com 23 (Karnataka)

Judiciary and Counsel Details

• S Sunil Dutt Yadav, J.
• E.I. Sanmathi., Adv. for the Petitioner.
• Aravind V. Chavan & Unnikrishnan M, Advs. for the Respondent.

Facts of the Case

The petitioner filed writ petitions challenging the Orders-in-Original (OIO), by which the claims for transitional ITC under TRAN-1 and TRAN-2 were rejected. In respect of TRAN-1, the jurisdictional officer under CGST noted the mismatch in input quantity/value vis-à-vis credit claimed and absence of detailed stock records, treating the credit as irregular and confirming demand. For TRAN-2, it was observed that no particulars of stock and no supporting invoices evidencing tax carried forward were furnished. Subsequently, pursuant to the Court’s directions, the petitioner appeared before the authority and submitted additional documents, while the authority sought CA-certified closing stock, purchase invoices, and sales registers for the relevant period. The matter was accordingly placed before the High Court.

High Court Held

The High Court held that the impugned orders had been passed in the absence of relevant documents which were subsequently produced by the petitioner pursuant to judicial directions. It observed that the authority itself had sought further certified records, indicating that reconsideration was necessary for proper adjudication under Section 140 of the CGST Act and the Karnataka GST Act. The Court further held that denial of transitional credit without examining the subsequently produced material would be improper. Accordingly, the impugned orders were set aside, and the matter was remanded for fresh consideration.