Works Contractor Wins Right to Claim Pre-GST Unutilized ITC via TRAN-1

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Case Name

Hans Raj Sons v. Union of India and Others

Court Name: High Court of Punjab & Haryana at Chandigarh

Case No.: CWP 36393/2019

Date of Decision: 16th December 2019

Key Takeaways

1. Pre-GST ITC is a vested right — Businesses that had accumulated unused tax credits under the old tax regime (like Punjab VAT Act, 2005) are entitled to carry them forward into GST.

2. TRAN-1 filing deadline extended — The court allowed the petitioner to file the statutory TRAN-1 form by 31.12.2019.

3. Alternative remedy provided — If the GST portal was not opened by the respondents, the petitioner was allowed to claim the unutilized credit in their GST-3B form for January 2020, either electronically or manually.

4. Covered by Adfert Technologies judgment — This case was decided purely on the basis of the earlier landmark ruling in CWP 30949 of 2018 — Adfert Technologies Pvt Ltd v. Union of India and Others, decided on 04.11.2019.

5. Revenue conceded — The government’s own counsel accepted that the issue was squarely covered by the Adfert Technologies case, making this a straightforward win for the petitioner.

Issue

Was Hans Raj Sons entitled to upload and claim its pre-GST unutilized Input Tax Credit (ITC) through the statutory TRAN-1 form under the GST regime, despite being unable to do so due to technical/portal issues?

In simple terms: Can a business that couldn’t file TRAN-1 on time (due to portal issues) still claim its old tax credits? The court said YES.

Facts

• Who is the petitioner? Hans Raj Sons is a proprietorship firm working as a Works Contractor — meaning they execute construction or similar contracts.

• Old registration: Before GST came into effect, they were registered under the Punjab VAT Act, 2005 and had accumulated Input Tax Credit (ITC) — basically, tax they had already paid on purchases and were entitled to use against future tax liabilities.

• GST transition problem: When GST was introduced in 2017, businesses were required to upload their unutilized ITC from the old regime into a special form called TRAN-1 on the GST portal. This was the only way to carry forward the old credits into the new GST system.

• The problem: Hans Raj Sons could not upload the details of their unutilized ITC as per their account books into the TRAN-1 form. This meant they were at risk of losing their legitimately earned tax credits.

• They went to court: They filed a writ petition before the Punjab & Haryana High Court seeking relief.

Arguments

Petitioner’s Side (Hans Raj Sons):

• Their counsel, Mr. Chetan Jain, argued that this issue had already been decided by the same High Court in the Adfert Technologies Pvt Ltd case (CWP 30949 of 2018) on 04.11.2019, in favour of taxpayers/assessees.
• Therefore, Hans Raj Sons is also entitled to the same relief as granted in that case.

Revenue’s Side (Union of India & Others):

• Their counsel, Mr. Sunish Bindlish, accepted the notice and conceded (agreed) that the issue raised in this petition is squarely covered by the Adfert Technologies judgment.
• The Revenue did not oppose the petition and agreed it should be disposed of in terms of the earlier judgment.

This was essentially an uncontested case — both sides agreed on the outcome!

Key Legal Precedents

This is the cornerstone precedent of the present case. In Adfert Technologies, the Punjab & Haryana High Court had already ruled in favour of taxpayers who were unable to file TRAN-1 forms due to technical glitches or other issues on the GST portal. The court held that such taxpayers cannot be denied their vested right to carry forward legitimately accumulated ITC from the pre-GST era.

In the present case, the court directly applied this precedent and disposed of Hans Raj Sons’ petition in the same terms as the Adfert Technologies judgment.

Judgement

Winner: Hans Raj Sons (Petitioner)

1. Petition Allowed — The court allowed the writ petition in terms of CWP No. 30949 of 2018 (the Adfert Technologies case) decided on 04.11.2019.

2. TRAN-1 Filing Deadline — The petitioner was given permission/modification to file the statutory TRAN-1 form by 31.12.2019.

3. Alternative Relief — In case the petitioner was hampered in any manner from availing the benefit of the judgment due to the portal not being opened by the Respondents, then the petitioner was permitted to alternatively claim the benefit of unutilized credit in their GST-3B Forms to be filed for the month of January 2020, either electronically or manually.

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

The judgment was delivered by Justice Jaswant Singh and Justice Sant Parkash.

FAQs

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

TRAN-1 is a statutory form under the GST regime that businesses had to file to carry forward their unutilized Input Tax Credit (ITC) from the pre-GST era (like VAT, Service Tax, etc.) into the GST system. If you couldn’t file it, you’d lose your old tax credits.

Q2: Why couldn’t Hans Raj Sons file the TRAN-1 form?

The judgment doesn’t go into specific technical details, but the petitioner stated they could not upload the details of their unutilized ITC as per their account books to the electronically generated TRAN-1 form — likely due to technical glitches on the GST portal, which was a widespread problem at the time.

Q3: What was the Adfert Technologies case about?

It was a landmark judgment by the same High Court (Punjab & Haryana) in CWP 30949 of 2018, decided on 04.11.2019, which ruled in favour of taxpayers/assessees who were unable to file TRAN-1 forms. The present case simply followed that ruling.

Q4: What happens if the GST portal still doesn’t open for filing TRAN-1?

The court provided a smart alternative — if the portal isn’t opened, the petitioner can claim the unutilized credit in their GST-3B form for January 2020, either electronically or manually. So the petitioner is protected either way.

Q5: Does this judgment apply to other businesses in a similar situation?

While this judgment is specific to Hans Raj Sons, it follows the broader Adfert Technologies precedent, which has been applied to many similar cases. Businesses in similar situations could potentially rely on these judgments, but they would need to file their own petitions. (Note: This is not legal advice.)

Q6: Did the government fight this case?

No! The government’s counsel conceded that the issue was covered by the Adfert Technologies judgment and agreed the petition should be allowed. It was essentially an uncontested case.

The petitioner, a proprietorship concern, is a Works Contractor. It is registered under the Goods and Service Tax Act, 2017. Prior to the introduction of Goods and Service Tax Act, 2017 it was registered under the provisions of Punjab VAT Act, 2005.

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.

Mr. Sunish Bindlish, Counsel for the respondents/ Revenue accepts notice and 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