GST TRAN-I Credit Can Be Revised Based On Manually Filed Excise Return: Bombay High Court

Justices M.S. Sonak and Jitendra Jain stated that “there were technical issues with respect to revising TRAN-1 and non-availability of electronic mode to revise excise return and it is only after directions issued by the Supreme Court in the case of Union of India vs. Filco Trade Centre Pvt. Ltd. 2022 that the assessee was able to revise its TRAN-1/TRAN-2 by filing manual revised excise return to claim the credit and transitioned under new regime.”

The assessee/petitioner is engaged in the business of manufacture and sale of industrial catalysts. On 26 August 2017, the assessee filed its GST Form TRAN-1 for transition of credit as per Section 140 of the CGST Act.

However, subsequently, the assessee realised that they had inadvertently failed to claim credit relating to 3 Bills of entries in the ER-1 return filed for the month of May/June 2017.

This fact was brought to the notice of the department by the assessee within one year from May/June 2017. The assessee requested the department to permit filing of revised Form TRAN-1, either manually or by reopening the GST portal.

The department issued a letter directing the assessee to reverse the credit which was not taken in the ER-1 return. The assessee replied to the said letter and stated that no credit has been taken and, therefore, no question of reversing.

On 22 July 2022, the Supreme Court in case of Union of India vs. Filco Trade Centre Pvt. Ltd. 2022 (63) GSTL 162 (S.C.) with respect to various technical issues in implementation of the GST directed the GST network to reopen the portal from 1 September 2022 to 31 October 2022 to allow various assessees to file/revise Form TRAN-1. The said date was extended till 30 November 2022.

On 23 November 2022, the assessee manually filed the revised ER-1 return for availing Cenvat credit with respect to 3 Bills of entries and also revised TRAN-1 for claiming credit of original amount and additional amount.

On 15 February 2023, Deputy Commissioner Division issued a show cause notice proposing to reject the revised TRAN-1. On 27 February 2023, Deputy Commissioner Division passed the order rejecting the revised Form TRAN-1, insofar as additional credit is concerned, on the ground that Circular dated 10 November 2022 only allows filing/revising of TRAN-1 or TRAN-2 and not the returns filed under the erstwhile regime.

The assessee submitted that after 1 July 2017, there was no way that the assessee could have revised the excise returns for the period May/June 2017 electronically since by that time, the GST regime had come into existence. Therefore, a manual revised ER-1 return was filed and consequently, TRAN-1 was revised within the time provided by the Supreme Court in the case of Filco Trade Centre Pvt. Ltd. (supra).

The department argued that in accordance with the notification dated 19 February 2010, the revision of the excise returns could have been only electronically and not manually.

The bench observed that the reasoning given in the order that the claim was not made within one year in the facts stated above would not survive. The assessee had informed the department within a period of one year, vide letter dated 16 February 2018, about the mistake in not claiming the credit in the excise return.

The bench found no infirmity in the claim made by the assessee by revising manually excise return from June 2017 and claiming transition of the enhanced credit under the GST regime by revising TRAN-1 within the time limit specified by the Supreme Court in the case of Filco Trade Centre Pvt. Ltd. (supra).

In view of the above, the bench allowed the petition.

Case Title: M/s. Johnson Matthey Chemicals v. Union of India

Case Number: WRIT PETITION NO. 15536 OF 2023

Counsel for Petitioner/Assessee: Priyanka Rathi

Counsel for Respondent/Department: Neeta Masurkar