Amendment in Section 140 of the CGST Act
This is to apprise you regarding retrospective amendment in Section 140 of the Central Goods and Services Tax Act, 2017 (‘CGST Act’) recently notified vide Notification No. 43/2020-Central Tax dated May 16, 2020. The amendment has enabled the Government to prescribe time limit for submitting Form GST TRAN-1 (‘TRAN-1’) and is effective from July 1, 2017.
In the case of Brand Equity Treaties Limited v. UOI, 2020-VIL-196-DEL (discussed in trailing mail), the Delhi High Court held that when the CGST Act does not prescribe any time limit for availing transitional credit, then the Government cannot prescribe time limit for its submission vide TRAN-1. Therefore, the taxpayers can submit TRAN-1 within 3 years from the date of implementation of GST viz. June 30, 2020 in accordance with the Limitation Act, 1963. Similar view has been taken by various other High Courts as well.
Vide this retrospective amendment, one of the reasonings adopted by the Delhi High Court will get over-ruled. Notably, the Court also adopted various other reasoning in the said judgement inter-alia transitional credit is a vested right which cannot be taken away because of non-filing of TRAN-1 within the given timeline. It also held that the Government cannot prescribe different timelines for taxpayers who could not submit TRAN-1 due to technical glitches on GST portal and other taxpayers.
Considering the same, the Delhi High Court continues to remain valid despite the aforesaid amendment. The taxpayers who could not submit TRAN-1 or missed some transitional credit, can file manual TRAN-1 or attempt filing it electronically.