GST Council’s Review Petition Allowed: TRAN-1 Upload Deadline Waived for Technical Glitch Victims

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Case Name

Goods & Services Tax Council Vs Union of India

Court Name: High Court of Kerala at Ernakulam

Case No: RP No. 945/2019, RP No. 946/2019, RP No. 948/2019, and RP No. 974/2019 (In WP(C) Nos. 13562/2018, 13488/2018, 13616/2018, and 13555/2018)

Before: The Honourable Mr. Justice A. Muhamed Mustaque

Date: Monday, 28th October 2019

Key Takeaways

1. Technical glitches on the GST portal are a valid reason for not being able to upload TRAN-1 forms on time — the court acknowledged this.

2. The Nodal Officer mechanism is the proper channel to resolve such issues — taxpayers must apply to the Nodal Officer, who will then investigate and facilitate the upload.

3. The deadline (time-frame) for uploading TRAN-1 is waived if the delay was not attributable to the taxpayer.

4. If uploading is still not possible for reasons not attributable to the petitioner, the authority must enable the taxpayer to take credit of the input tax available at the time of migration.

5. The GST Council’s review petitions were allowed, but the outcome still favoured the taxpayers in substance — the directions from W.P.© No. 41337/2018 were made applicable to all these cases too.

6. This case reinforces the principle that taxpayers should not be penalized for system failures beyond their control.

Issue

The central legal question here is:

Should taxpayers who were unable to upload GST TRAN-1 forms due to technical glitches on the GST portal be allowed to do so beyond the prescribed deadline, and who should decide whether the delay was the taxpayer’s fault?

In simpler terms: Can the government’s own portal failure be used against the taxpayer to deny them their rightful Input Tax Credit (ITC)?

Facts

• Several businesses — mainly from the Pothys group (textile retailers in Thiruvananthapuram) and M/s. Cheran Automobiles — were transitioning to the new GST regime.

• Under Section 140(3) of the Central GST Act, taxpayers were entitled to carry forward their Input Tax Credit (ITC) from the old tax regime to the new GST regime by filing FORM GST TRAN-1.

• These businesses tried to upload the TRAN-1 form but couldn’t do so because of technical snags/glitches on the GST portal.

• They approached the High Court of Kerala through Writ Petitions (WP© Nos. 13562, 13488, 13616, and 13555 of 2018).

• The High Court, in its judgment dated 14.03.2019, ruled in favour of the taxpayers and permitted them to submit the TRAN-1 form, accepting that the failure was due to technical issues.

• The GST Council, Union of India, and GSTN were unhappy with this judgment and filed Review Petitions (RP Nos. 945, 946, 948, and 974 of 2019) asking the court to reconsider.

• The review petitioners pointed to a different judgment — in W.P.© No. 41337/2018 — which had set up a more structured process through a Nodal Officer, rather than directly permitting the upload.

Arguments

GST Council / Union of India (Review Petitioners) Said:

• The original judgment was too broad — it directly permitted the writ petitioners to submit TRAN-1 without going through the proper administrative process.
• They pointed to the judgment in W.P.(C) No. 41337/2018, which had a more balanced approach — directing taxpayers to apply to the Nodal Officer, who would then investigate and decide whether the delay was attributable to the taxpayer or the system.
• They wanted the matter to be routed through the Nodal Officer rather than having a blanket court order permitting the upload.

Taxpayers / Writ Petitioners (Respondents) Said

• They had no objections to being given directions similar to those in W.P.(C) No. 41337/2018.
• They just wanted to ensure they could claim their rightful ITC that they had accumulated under the old tax regime.
• The technical glitch was not their fault, and they should not lose their ITC because of a government portal failure.

Key Legal Precedents

1. W.P.(C) No. 41337/2018 — High Court of Kerala

This is the most important precedent in this case. The court quoted paragraphs 4, 5, and 6 of this judgment extensively:

“Not only the petitioner but also many other people faced this technical glitch and approached this Court. Both the learned counsel submit that this Court on earlier occasions permitted the petitioner to apply to the Nodal Officer concerned to have the issue resolved.”

“So, here too, the petitioner may apply to the Nodal Officer, the second respondent. The petitioner applying, the Nodal Officer will look into the issue and facilitate the petitioner’s uploading FORM GST TRAN-1, without reference to the time-frame.”

“If the uploading of FORM GST TRAN-1 is not possible for reasons not attributable to the petitioner, the authority will also enable it to take credit of the input tax available at the time of its migration.”

This judgment established the Nodal Officer mechanism as the proper process for resolving TRAN-1 upload issues due to technical glitches.

2. Section 140(3) of the Central GST Act

This is the statutory provision that gives taxpayers the right to carry forward ITC from the pre-GST regime. The original writ petitions were filed to enforce this right.

3. Notification No. 48/2018 Central Tax dated 10.09.201

This notification was submitted as Annexure I by the review petitioners in all four review petitions. It is relevant to the extension/modification of the TRAN-1 filing timeline.

4. Circular No. 39/13/2018 dated 03.04.2018

This circular, submitted as Annexure II, constituted the IT Grievance Redressal Mechanism — essentially setting up the framework for resolving technical issues faced by taxpayers on the GST portal.

5. W.P.(C) No. 4315/2019 — High Court of Kerala (dated 20.03.2019)

This judgment was submitted as Annexure III by the review petitioners in all four review petitions, further supporting the Nodal Officer approach.

Judgment

Technically, the GST Council and Union of India won the review petitions in the sense that the original judgment was modified. However, in substance, the taxpayers also won because the court ensured their rights were protected.

What Did the Court Decide?

The court allowed all four review petitions (RP Nos. 945, 946, 948, and 974 of 2019) and held that:

1. The directions given in W.P.© No. 41337/2018 would govern these matters as well.

2. Instead of a blanket permission to upload TRAN-1, the taxpayers must apply to the Nodal Officer concerned.

3. The Nodal Officer will investigate whether the delay in uploading was attributable to the taxpayer or to the system.

4. The Nodal Officer will facilitate the uploading of FORM GST TRAN-1 without reference to the time-frame (i.e., the deadline is effectively waived for genuine cases).

5. If uploading is still not possible for reasons not attributable to the petitioner, the authority must enable the taxpayer to take credit of the input tax available at the time of migration.

6. The timeline suggested was: taxpayer applies within two weeks of receiving the judgment → Nodal Officer considers and takes steps within one week thereafter.

Orders Made:

“The review petitions are allowed holding that the directions in the judgment in W.P.© No. 41337/2018 would govern this matter as well. All the directions in the above judgment shall be followed in the case of the petitioners as well. Accordingly, the review petitions are disposed of.”

FAQs

Q1: What is FORM GST TRAN-1 and why is it important?

FORM GST TRAN-1 is a transitional form that businesses had to file when India switched to the GST regime. It allowed them to carry forward the Input Tax Credit (ITC) they had accumulated under the old tax system (like VAT, excise duty, etc.) into the new GST system. Missing this filing could mean losing significant tax credits worth lakhs or crores of rupees.

Q2: What is a “technical glitch” in this context?

A technical glitch refers to errors, failures, or malfunctions on the GSTN (GST Network) portal that prevented taxpayers from uploading their TRAN-1 forms despite their genuine attempts to do so. The court acknowledged that many taxpayers faced this issue.

Q3: Who is the “Nodal Officer” mentioned in the judgment?

The Nodal Officer is a designated government official responsible for resolving IT-related grievances on the GST portal. Under Circular No. 39/13/2018 dated 03.04.2018, an IT Grievance Redressal Mechanism was set up, and the Nodal Officer is the key person in this mechanism.

Q4: Does this judgment mean all taxpayers who missed the TRAN-1 deadline can now file it?

Not automatically. The judgment applies specifically to the petitioners in these cases. However, the principle established — that technical glitches are a valid reason for delay and the Nodal Officer should investigate — has been applied in many similar cases across India.

Q5: What happens if the Nodal Officer finds that the delay WAS the taxpayer’s fault?

The judgment doesn’t explicitly address this, but the implication is that if the delay was attributable to the taxpayer (and not the system), the relief may not be granted. The Nodal Officer has the discretion to make this determination.

Q6: What if the TRAN-1 still cannot be uploaded even after the Nodal Officer’s intervention?

The court was clear on this — if uploading is not possible for reasons not attributable to the petitioner, the authority must enable the taxpayer to take credit of the input tax available at the time of migration. So the taxpayer won’t lose their ITC in any case.

Q7: Why did the GST Council file a review petition if the outcome still favoured taxpayers?

The GST Council wanted to ensure that there was a proper administrative process (through the Nodal Officer) rather than a blanket court order. This gives the government more control over verifying genuine cases versus fraudulent claims. The review was about the process, not about denying taxpayers their rights entirely.

Q8: What is the significance of Section 140(3) of the Central GST Act?Section 140(3) is the provision that gives unregistered dealers or those dealing in exempted goods the right to claim ITC on stock held on the appointed day (when GST came into effect). This is the legal basis for the TRAN-1 claims in this case.

These review petitions are filed by the Goods and Services Tax Council along with Union Government aggrieved by Judgment of this Court dated 14.03.2019 in W.P. (C)Nos.13562,13488,13616 & 13555 of 2018. This Court disposed of all these writ petitions permitting the writ petitioners to submit GST TRAN-1 Form claiming input tax as provided under Section 140 (3) of the Central Act. This Court disposed writ petitions on a premise that the writ petitioners could not upload the details on account of technical snag.

2. The review petitioners placed reliance upon the judgment in W.P.(C)No. 41337/2018. It is appropriate to refer paragraphs 4,5 &6 of the said judgment, which read thus:

“4. Not only the petitioner but also many other people faced this technical glitch and approached this Court. Both the learned counsel submit that this Court on earlier occasions permitted the petitioner to apply to the Nodal Officer concerned to have the issue resolved.

5. So, here too, the petitioner may apply to the Nodal Officer, the second respondent. The petitioner applying, the Nodal Officer will look into the issue and facilitate the petitioner's uploading FORM GST TRAN-1, without reference to the time-frame. Ordered so.

6. I may also observe that if the petitioner applies within two weeks after receiving this judgment, the Nodal Officer will consider it and take steps within a week thereafter. If the uploading of FORM GST TRAN-1 is not possible for reasons not attributable to the petitioner, the authority will also enable it to take credit of the input tax available at the time of its

migration.”

In the aforesaid judgment, this Court left the decision of the

Nodal Officer concerned to decide whether delay in uploading

details was attributable to the writ petitioners or not. The writ

petitioners have no objections in giving similar directions.

In the light of above, the review petitions are allowed

holding that the directions in the judgment in W.P.(C) No.

41337/2018 would govern this matter as well. All the directions

in the above judgment shall be followed in the case of the

petitioners as well. Accordingly, the review petitions are disposed

of.

Sd/-

A.MUHAMED MUSTAQUE

JUDGE