GST Transitional Credit Win: Company Gets Right to File TRAN-1 Form

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Case Name

Asian Casts and Forgings Pvt. Ltd. v. Union of India and Others

Court Name: High Court of Punjab & Haryana at Chandigarh

Case No.: CWP 35166/2019

Date of Decision: 16th December 2019

Key Takeaways

1. Transitional ITC is a vested right — Businesses that had accumulated ITC under the old tax regime (Central Excise Act, 1944 and Punjab VAT Act) are entitled to carry it forward into GST.

2. Technical glitches on the GST portal cannot deny taxpayers their rightful credit — If the portal doesn’t work, the taxpayer should still get their credit.

3. The case was decided following the landmark judgment in Adfert Technologies Pvt. Ltd. v. Union of India — This earlier case set the precedent that was directly applied here.

4. Deadline extended to 31st December 2019 — The petitioner was given time to file TRAN-1.

5. Alternative remedy provided — If the portal still didn’t open, the credit could be claimed in GST-3B for January 2020, either electronically or manually.

Issue

The central legal question here is:

Can a taxpayer be denied the benefit of unutilized Input Tax Credit (ITC) accumulated under the pre-GST regime (Central Excise Act, 1944 and Punjab VAT Act) simply because they were unable to upload the details in Form TRAN-1 on the GST portal due to technical issues?

The answer the court gave was a clear NO — the taxpayer cannot be denied this benefit.

Facts

• Who is the petitioner? Asian Casts and Forgings Pvt. Ltd. is a Private Limited Company engaged in the manufacture and sale of cycle parts, registered in Ludhiana under the Goods and Service Tax Act, 2017.

• What was their old registration? Before GST came into effect, the company was registered under the Central Excise Act, 1944 and the Punjab VAT Act. This means they had been paying taxes under the old system and had accumulated Input Tax Credit (ITC) — basically, tax credits they hadn’t yet used.

• What’s the problem? When GST was introduced, businesses were supposed to carry forward their old, unused ITC into the new GST system by filing a statutory form called “TRAN-1” electronically. But the petitioner could not upload the details of their unutilized ITC as per their account books onto the GST portal.

• Why couldn’t they upload? The judgment doesn’t go into specific technical details, but the inability to file TRAN-1 is a well-known issue that many businesses faced due to technical glitches on the GST portal.

• What did they do? They approached the High Court of Punjab & Haryana seeking relief.

Arguments

Petitioner’s Side (Asian Casts and Forgings Pvt. Ltd.)

• The petitioner argued that they had legitimate, unutilized ITC under the old tax laws that they were entitled to carry forward into GST.
• They were unable to upload the required details in Form TRAN-1 on the GST portal.
• They pointed out that this exact issue had already been decided by the same High Court in CWP 30949 of 2018 titled “Adfert Technologies Pvt. Ltd. v. Union of India and Others” (decided on 04.11.2019) in favour of the assessees.
• Therefore, they argued they were entitled to the same relief as granted in the Adfert Technologies case.

Respondents’ Side (Union of India and Others)

• Interestingly, the Revenue (Government) did not contest the petition!
• Mr. Sunish Bindlish, Counsel for the respondents, conceded that the issue raised in this petition is “squarely covered” by the judgment in the Adfert Technologies case (supra) dated 04.11.2019.
• Therefore, the respondents agreed that the petition should be disposed of in terms of that earlier case.

Key Legal Precedents

• This was a landmark judgment by the same High Court, decided just about a month before the current case.
• In that case, the court had already ruled in favour of assessees who were unable to file Form TRAN-1 on the GST portal due to technical issues.
• The court had held that taxpayers cannot be denied their transitional ITC merely because of portal-related technical difficulties.
• The current case of Asian Casts and Forgings was found to be “squarely covered” by this judgment — meaning the facts and legal issues were identical.
• Both the petitioner’s counsel and the respondents’ counsel agreed that the Adfert Technologies judgment directly applied here.
• The court therefore followed and applied the Adfert Technologies judgment to decide this case.

Judgement

The Petitioner Won

1. The petition was allowed — The court ruled in favour of Asian Casts and Forgings Pvt. Ltd.

2. Following Adfert Technologies — The decision was made in terms of CWP No. 30949 of 2018 decided on 04.11.2019 (the Adfert Technologies case).

3. Deadline to file TRAN-1 — The petitioner was given permission/modification to file the statutory Form TRAN-1 by 31.12.2019.

4. Alternative remedy — The court also provided a safety net: “In case the petitioner is hampered in any manner from availing the benefit of aforesaid judgment, due to non-opening of the Portal by the Respondents, then the petitioner shall be permitted, in the alternative to claim the benefit of unutilized credit in their GST-3B Forms to be filed for the month of January, 2020 either electronically or manually.”

5. No order as to costs — Neither party was ordered to pay the other’s legal costs.

Judges: Hon’ble Mr. Justice Jaswant Singh and Hon’ble Mr. Justice Sant Parkash

FAQs

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

Form TRAN-1 is a transitional form under GST that businesses had to file to carry forward their unutilized Input Tax Credit (ITC) from the pre-GST era (under Central Excise, VAT, etc.) into the new GST system. It was crucial because without filing it, businesses would lose the tax credits they had legitimately accumulated under the old tax laws.

Q2: Why couldn’t the petitioner file TRAN-1?

The petitioner was unable to upload the details of their unutilized ITC onto the GST portal electronically. This was a widespread problem faced by many businesses due to technical glitches on the GST portal.

Q3: What is Input Tax Credit (ITC)?

ITC is essentially a tax credit that a business accumulates when it pays taxes on its purchases/inputs. This credit can be used to offset the tax liability on sales. When GST was introduced, businesses had old, unused ITC under the previous tax regime that they were entitled to carry forward.

Q4: What happens if the GST portal still doesn’t open after the court order?

The court was thoughtful about this! It provided an alternative remedy — if the portal doesn’t open, the petitioner can claim the unutilized credit in their GST-3B Forms for January 2020, either electronically or manually. So the petitioner is protected either way.

Q5: Is this case useful for other businesses facing the same problem?

Yes, absolutely! This case, along with the Adfert Technologies Pvt. Ltd. v. Union of India judgment (CWP 30949 of 2018), establishes that businesses cannot be denied their transitional ITC due to portal-related technical issues. Other businesses in similar situations can cite these judgments.

Q6: Did the government fight this case?

No! The government’s counsel actually conceded that the issue was covered by the Adfert Technologies judgment and agreed that the petition should be allowed. This shows that even the Revenue accepted the legal position established in the earlier case.

Q7: What laws were involved in this case?

The key laws mentioned are:

• Goods and Service Tax Act, 2017 (new GST regime)
• Central Excise Act, 1944 (old central tax law)
• Punjab VAT Act (old state tax law)

The petitioner, a Private Limited Company, is engaged in the business of manufacture and sale of cycle parts. It is registered at Ludhiana under the Goods and Service Tax Act, 2017. Prior to the introduction of Goods and Service Tax Act, the petitioner was registered under the provisions of Central Excise Act, 1944 and Punjab VAT Act.

Grievance of the petitioner is that it could not upload the details of un-utilized Input Tax Credit (in short 'ITC') as per the accounts books to the electronically generated statutory Form “TRAN-I” which was the requirement under the GST regime for availing the benefit of the previous un-utilized ITC accrued under the Taxing Statutes.

Counsel for the petitioner submits that the issue stands decided by this Court, vide judgment dated 04.11.2019, passed in CWP 30949 of 2018 titled “Adfert Technologies Pvt. Ltd. Versus Union of India and others” in favour of the Assessees, hence the petitioner-Company is also entitled to relief in the same terms.

Notice of motion was issued for today.

Mr. Sunish Bindlish, Counsel for the respondents/ Revenue concedes that the issue raised in the present petition is squarely covered by the aforesaid judgment dated 04.11.2019, passed in Adfert Technologies case (supra), therefore, the present petition is liable to be disposed of in terms of the said case.

In view of above, present petition is allowed in terms of the said CWP No.30949 of 2018 decided on 04.11.2019 with permission/modification to file the said Statutory Form TRAN-I by 31.12.2019.

It is clarified that in case the petitioner is hampered in any

manner from availing the benefit of aforesaid judgment, due to non

opening of the Portal by the Respondents, then the petitioner shall be

permitted, in the alternative to claim the benefit of unutilized credit in

their GST-3B Forms to be filed for the month of January,2020 either

electronically or manually.

No order as to costs.

(Jaswant Singh)

Judge

(Sant Parkash)

Judge