Pothys Group wins relief on GST TRAN-1 filing glitches — Madras HC orders Nodal Officer redressal

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Case Name

M/s. Pothys & Others v. The Principal Chief Commissioner, Goods and Services Tax & Others

Court Name: High Court of Judicature at Madras

Case No.: W.P. Nos. 7218 to 7225 of 2018

Decided on: 18th July 2018

Before: The Honourable Mr. Justice T.S. Sivagnanam

Key Takeaways

1. Technical glitches on the GST portal are a valid grievance — the court acknowledged that taxpayers couldn’t be penalized for system failures beyond their control.

2. CBIC Circular No. 39/13/2018-GST dated 03.04.2018 is the key circular that set up the Grievance Redressal Mechanism for stuck TRAN-1 filings, and the court relied heavily on it.

3. Nodal Officers are the first point of contact — taxpayers must approach them with their grievances, and the officers are duty-bound to act.

4. The deadline for TRAN-1 filing was NOT extended generally — only those taxpayers who genuinely tried but couldn’t file due to IT glitches were to be helped.

5. Consistency across High Courts — Similar directions were issued by the High Courts of Chhattisgarh, Delhi, and Kerala, showing a national consensus on this issue.

6. Strict timelines were set by the Madras HC for the entire redressal process — from submission to final decision.

Issue

The central legal question: Should the court direct the GST authorities to allow taxpayers to file Form GST TRAN-1 (either electronically or manually) when they were unable to do so within the stipulated time due to technical glitches on the GST portal — glitches that were not attributable to the taxpayers themselves?

In simpler terms: Can a taxpayer lose their rightful transition tax credit just because the government’s own IT system failed them?

Facts

• Who are the petitioners? Eight entities under the Pothys brand — a prominent textile retail group — operating across Chennai, Tirunelveli, and Puducherry. They are represented by their Managing Partner/Director Mr. S. Ramesh.

• What is Form GST TRAN-1? When GST was introduced in July 2017, businesses that had already paid taxes under the old regime (central excise, service tax, VAT) were entitled to carry forward those credits into the GST system. Form GST TRAN-1 was the form used to claim this transition credit.

• What went wrong? The petitioners tried to upload Form GST TRAN-1 within the stipulated time but couldn’t do so due to technical errors/glitches on the GST portal. This meant they risked losing their legitimate tax credits.

• What did they ask for? They filed Writ Petitions under Article 226 of the Constitution of India seeking a direction to the 1st Respondent (Principal Chief Commissioner, GST) to either allow them to file GST TRAN-1 electronically or manually and treat it as validly filed.

• What was the government’s response? The CBIC had already acknowledged this widespread problem and issued Circular No. 39/13/2018-GST dated 03.04.2018, setting up a Grievance Redressal Mechanism with Nodal Officers. The Tamil Nadu government had also nominated Mr. S. Ramasamy, Joint Commissioner (CS) as the State Level Nodal Officer.

Arguments

Petitioners’ Side (M/s. Pothys & Others):

• They were unable to upload Form GST TRAN-1 within the stipulated time due to technical glitches on the GST portal — through no fault of their own.

• They sought directions to file the form either electronically or manually so their transition credits could be preserved.

• Their counsel, Mr. A. Ravichandran, pointed out that similar directions had already been issued by the High Courts of Chhattisgarh, Delhi, and Kerala, and requested identical directions from the Madras HC.

• The petitioners also argued that paragraph 5 of Circular No. 39/13/2018-GST was confined only to non-TRAN-1 issues — implying that the TRAN-1 issue needed a separate, more direct remedy.

Respondents’ Side (GST Authorities):

• Mr. V. Sundareswaran (for the 1st Respondent/Central GST), Mrs. G. Dhana Madhri (for the State of Tamil Nadu), and Mr. T.L. Thirumalaaisamy (for Union of India and GSTN) appeared for the respondents.

• The Government Advocate informed the court that the Tamil Nadu government had already nominated a Nodal Officer — Mr. S. Ramasamy, Joint Commissioner (CS) — vide proceedings dated 18.05.2018.

• The Senior Standing Counsel for GSTN confirmed that GSTN and Commissioner of GST and Central Excise (Outer) had also appointed a Nodal Officer.

• The respondents essentially pointed to the existing Circular No. 39/13/2018-GST as the proper mechanism for redressal, suggesting the petitioners should use that route.

Key Legal Precedents

The court referred to three important High Court decisions on the same issue:

1. High Court of Chhattisgarh — W.P(T) No. 68 of 2018 (Order dated 14.05.2018)

• This was one of the earliest High Court decisions on the TRAN-1 glitch issue.

• The Chhattisgarh HC directed the petitioner to approach the Nodal Officer (Assistant Commissioner, State GST, Raipur Circle – 7) within four days with a representation and all necessary documents.

• The Nodal Officer was directed to consider and dispose of the matter following the procedure in paragraph 8 of Circular No. 39/13/2018-GST dated 03.04.2018.

2. High Court of Delhi — W.P© No. 1300 of 2018 etc. batch (Order dated 09.04.2018)

• The Delhi HC directed petitioners to approach the concerned Nodal Officer with brief representations outlining their grievances.

• The Nodal Officer or the Redressal Committee was directed to deal with representations in accordance with Circular dated 03.04.2018.

3. High Court of Kerala — W.P. No. 17348 of 2018 (Order dated 14.06.2018)

• The Kerala HC permitted the petitioner to prefer an application before the Nodal Officer appointed to resolve such issues.

• Crucially, the Kerala HC added: “if it is found that the petitioner could not upload FORM GST TRAN-1 for reasons not attributable to him, appropriate action shall be taken to enable him to take credit of the input tax available to him at the time of migration.”

Key Circular Referenced:

CBIC Circular No. 39/13/2018-GST dated 03.04.2018 — This circular set up the entire Grievance Redressal Mechanism. Key provisions relied upon:

• Paragraph 8 — Resolution of stuck TRAN-1s: GSTN to identify taxpayers who tried but couldn’t file TRAN-1 due to IT glitches; facility to complete filing to be provided; deadline set as 30th April 2018 for TRAN-1 and 31st May 2018 for GSTR-3B.

• Paragraph 5.1 — Appointment of Nodal Officers by GSTN, Central and State Governments to address portal glitch problems.

Judgment

Who won?

The petitioners (M/s. Pothys group) got practical relief — the court didn’t dismiss their petitions but disposed of them with structured, time-bound directions that gave the taxpayers a clear path to resolve their grievance.

Court’s Reasoning:

• The court found that the petitioners’ argument that paragraph 5 of Circular No. 39/13/2018-GST was confined only to non-TRAN-1 issues was not sustainable — there was no such specific distinction in the circular. Therefore, the Nodal Officer mechanism under paragraph 5 applied to TRAN-1 issues as well.

• The court followed the consistent approach of the High Courts of Chhattisgarh, Delhi, and Kerala in directing taxpayers to the Nodal Officer mechanism.

• Since Nodal Officers had already been appointed (both at the State level and by GSTN/Central GST), the redressal mechanism was in place and ready to be used.

Orders Made:

The court issued the following time-bound directions:

1. The respective Commissioner of GST and Central Excise are directed to appoint Nodal Officer(s) for Tamil Nadu, if not already appointed, within 2 weeks from the date of receipt of the order.

2. The petitioners/assessees are directed to submit their applications in accordance with paragraph 8 of Circular No. 39/13/2018-GST dated 03.04.2018 to their respective Assessing Officers/Jurisdictional Officers/GST Officers within 2 weeks from the date of receipt of the order.

3. The Assessing Officers are directed to forward the applications to the Nodal Officers within 1 week of receiving them.

4. The Nodal Officer, in consultation with GSTN, shall take note of the grievances and forward them to the Grievance Committee.

5. The Grievance Committee shall take an appropriate decision within 3 weeks from the date the applications are received in proper form.

6. No costs were awarded.

FAQs

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

Form GST TRAN-1 is the transition form that businesses had to file when GST was introduced to carry forward their existing tax credits (like central excise duty, service tax, VAT) into the GST system. Missing this filing meant losing legitimate tax credits that businesses had already paid — which could be a significant financial loss.

Q2: Did the court actually allow Pothys to file the TRAN-1 form?

Not directly. The court didn’t itself grant permission to file. Instead, it directed the petitioners to approach the Nodal Officers through the established mechanism, and directed those officers to process the grievances within strict timelines. The final decision on whether to allow filing rests with the Grievance Committee.

Q3: What happens if the Nodal Officer finds the glitch was not the taxpayer’s fault?

As the Kerala HC noted (and which the Madras HC followed in spirit): if it is found that the taxpayer could not upload FORM GST TRAN-1 for reasons not attributable to them, appropriate action shall be taken to enable them to take credit of the input tax available at the time of migration.

Q4: Was the deadline for filing TRAN-1 extended for everyone?

No! The CBIC circular was very clear — the last date for filing TRAN-1 was not being extended in general. Only those taxpayers who genuinely tried but couldn’t complete the process due to IT glitches were to be helped.

Q5: What is the significance of this judgment beyond the Pothys case?

This judgment is significant because it confirms that taxpayers across India who faced genuine technical difficulties in filing TRAN-1 have a legal remedy. It also establishes that courts will not allow taxpayers to lose legitimate tax credits due to government portal failures. The consistent approach across multiple High Courts (Chhattisgarh, Delhi, Kerala, and now Madras) creates a strong precedent.

Q6: What was the petitioners’ argument about paragraph 5 of the circular, and did it succeed?

The petitioners argued that paragraph 5 of Circular No. 39/13/2018-GST (which deals with Nodal Officers) was only for non-TRAN-1 issues, implying they needed a more direct remedy. The court rejected this argument, holding that there was no such specific distinction in paragraph 5, and the Nodal Officer mechanism applied to TRAN-1 issues as well.

Q7: How long did the entire redressal process take under the court’s directions?

Under the court’s timeline: Petitioners had 2 weeks to submit applications → Assessing Officers had 1 week to forward them → Grievance Committee had 3 weeks to decide. So the entire process was expected to conclude in approximately 6 weeks from the date of the order.

Heard both.

2. The sum and substance of the prayer of the petitioners is

that they are unable to upload Form GST TRAN-1 to take credit of

the input tax/ service tax/central excise duty availed by them at

the time of migration within the time stipulated.

3. The petitioners would state that they were unable to

upload Form GST TRAN-1 within the time stipulated on account of

some error. Therefore, the petitioners seek for appropriate

direction in this regard.

4. Similar prayers were made before the High Courts of

Chhattisgarh, Delhi and Kerala. The High Court of Chhattisgarh,

in W.P(T) No.68 of 2018 by order dated 14.5.2018, issued

appropriate directions. The operative portion of the said order https://hcservices.ecourts.gov.in/hcservices/

reads as follows:

7. After going through the aforesaid

circular and the scheme of the circular, I am

convinced that complete procedure has been

prescribed for redressal of grievance which

the petitioner has raised in this writ

petition, particularly of non-uploading of

FORM TRAN-I due to technical glitches. Apart

from this State Government – Commissioner,

Central Excise/GST has issued order dated

5.4.2018 in which Nodal Officers have already

been appointed by the State Government. In

view of the above, the petitioner is directed

to approach the Nodal Officer of Dhamtari

i.e., Assistant Commissioner, State GST,

Raipur Circle – 7 within four days from today

by filing representation along with all

necessary documents for redressal of his

grievance and in turn, the said authority

would consider and dispose of the same

following the procedure laid down in para 8

of the circular dated 3.4.2018 and would take

decision accordingly keeping in view that

this writ petition remained pending since

26.3.2018.

8.With the aforesaid direction, the writ

petition stand finally disposed of.”

5. So far as the High Court of Delhi is concerned, the

Delhi High Court, in W.P(C) No.1300 of 2018 etc. batch by order

dated 09.4.2018, directed the petitioners therein to approach

the concerned Nodal Officer with brief representations outlining

their grievances and the Nodal Officer or the Redressal

Committee was directed to appropriately deal with

representations in accordance with the circular dated 03.4.2018.

6. So far as the Kerala High Court is concerned, in

W.P.No.17348 of 2018 by order dated 14.6.2018, the following

direction has been issued:

“Having regard to the facts and

circumstances of this case as also the orders

passed in similar matters, I deem it

appropriate to dispose of the writ petition

permitting the petitioner to prefer an

application before the additional sixth

respondent, the Nodal Officer appointed to

resolve issues in the nature of one raised by

the petitioner. Ordered accordingly.

Needless to say that if the petitioner

prefers an application within two weeks from

the date of receipt of a copy of this

judgment, same shall be considered and

appropriate decision shall be taken by the

additional sixth respondent within a week

thereafter. Needless also to say that if it

is found that the petitioner could not upload

FORM GST TRAN-1 for reasons not attributable

to him, appropriate action shall be taken to

enable him to take credit of the input tax

available to him at the time of migration.”

7. The learned counsel appearing for the petitioners would

submit that identical directions may be issued in this batch of

cases as well.

8. It was brought to the notice of the Central Board of

Indirect Taxes (CBIC) and Customs about the difficulties faced by

a section of tax payers owing to technical glitches on the GST

and representations were given by the petitioners. Therefore, the

CBIC is setting up a Grievance Redressal Mechanism vide Circular

No.39/13/2018-GST dated 03.4.2018. Paragraph 8 of the said

circular would be relevant for the purpose of the cases on hand,

which reads as under :

“8. Resolution of stuck TRAN-1s and

filing of GSTR-3B

8.1 A large number of taxpayers could

not complete the process of TRAN-1 filing

either at the stage of original or revised

filing as they could not digitally

authenticate the TRAN-1s due to IT related

glitches. As a result, a large number of

such TRAN-1s are stuck in the system. GSTN

shall identify such taxpayers who could not

file TRAN-1 on the basis of electronic audit

trail. It has been decided that all such

taxpayers, who tried but were not able to

complete TRAN-1 procedure (original or

revised of filing them on or before

27.12.2017 due to IT glitch, shall be

provided the facility to complete TRAN-1

filing. It is clarified that the last date

for filing of TRAN-1 is not being extended in

general and only these identified taxpayers

shall be allowed to complete the process of

filing TRAN-1.

8.2. The Taxpayers shall not be allowed

to amend the amount of credit in TRAN-1

during this process vis-a-vis the amount of

credit which was recorded by the taxpayer in

the TRAN-1, which could not be filed. If

needed, GSTN May request field formations for

Centre and State to collect additional

document/data etc., or verify the same to

identify taxpayers who should be allowed this

procedure.

8.3. GSTN shall communicate directly

with the taxpayers in this regard and submit

a final report to GIC about the number of

TRAN-1s filed and submitted through this

process.

8.4. The taxpayers shall complete the

process of filing of TRAN 1 stuck due to IT

glitches, as discussed above, by 30th April

2018 and the process of completing filing of

GSTR 3B which could not be filed for such

TRAN 1 shall be completed by 31st May 2018.”

9. Further, paragraph 5.1 of the said circular would state

that GSTN, Central and State Government would appoint Nodal

Officers in requisite number to address the problem a taxpayer

faces due to glitches, if any, in the common portal. This would

be publicized adequately.

10. An argument was advanced by the learned counsel for the

assessees that paragraph 5 of the said circular dated 03.4.2018

is confined to non-TRAN-1 issues. However, this Court finds that

there is no such specific distinction brought about in paragraph

5 of the said circular. Therefore, it can be safely held that

the procedure of appointment of Nodal Officers and identification

of issues are to be done in the manner provided in paragraph 5 of

the said circular. Unless the Nodal Officers are appointed, the

Jurisdictional officer of the Assessee, namely Assessing Officer

would not be in a position to forward the

representations/applications filed by the assessees pointing out

the glitches they are facing while availing the credit during the

transition process.

11. The learned Government Advocate submits that the

Principal Secretary and Commissioner of Commercial Taxes,

Government of Tamil Nadu vide, proceedings dated 18.5.2018,

nominated Mr.S.Ramasamy, Joint Commissioner (CS) as the State

Level Nodal Officer to address the problems faced by the tax

payers due to IT glitches, if any, in the GST portal. The Senior

Standing Council appearing for GSTN and Commissioner of GST and

Center Excise (Outer) has also informed that already a Nodal

officer had been appointed by GSTN and Commissioner of GST and

Central excise (Outer).

12.Thus, writ petitions stand disposed of with the following

directions:

(i) The respective Commissioner of GST and Central excise

are directed to appoint Nodal Officer/Officers for the State of

Tamil Nadu, if not already appointed, within a period of 2 weeks

from the date of receipt of a copy of this order and

(ii) The petitioners/assessees are directed to submit their

applications in accordance with paragraph 8 of the said circular

dated 03.4.2018 within a period of two weeks from the date of

receipt of a copy of this order to their respective Assessing

Officers/Jurisdictional Officers/GST Officers. The Assessing

Officers are directed to forward the applications to the Nodal

Officers within a period of one week. The Nodal Officer nominated

will, in consultation with the GSTN, shall take note of the

grievances expressed by the petitioners/assessees and forward the

same to the Grievance Committee, who, in turn, would take an

appropriate decision in the matter within a period of three weeks

from the date, on which, the applications are received in proper

form.

No costs.