High Court allows carry forward of transitional credit despite retrospective amendment I Represented by NITYA Tax Associates

by | Jun 17, 2020 | Insight

We are pleased to inform you that NITYA Tax Associates has successfully represented the case of SKH Sheet Metal Components v. UOI, Writ Petition No. 13151 of 2019 before the Delhi High Court. The issue pertained to everlasting battle of transition of missed pre-GST credits through Form GST TRAN-1 (‘TRAN-1’). The judgment is the first ruling after the retrospective amendment in Section 140 of the Central Goods and Services Tax Act, 2017 (‘CGST Act’) on May 16, 2020 effective from July 1, 2017 (refer trailing mail for our detailed update on the issue).

In this case, the taxpayer missed carry forward of transitional credit on account of inadvertent error. The Court held that despite the retrospective amendment, the taxpayer can carry forward the credit. The Court noted that Section 140 of the CGST Act grants substantive right to taxpayer to carry forward credit of erstwhile taxes. Rule 117 of the Central Goods and Services Tax Rules, 2017 (‘CGST Rules’) which provides time-limit, is only procedural in nature and cannot take away substantive right of claiming credit. 

Note: The Court refrained from commenting on the validity of the retrospective amendment made in Section 140 of the CGST Act as not being subject matter of the writ petition. 

NITYA Comments:

The judgment comes as a major relief to the taxpayers after retrospective amendment in the CGST Act. This is last chance for taxpayers who missed to carry forward pre-GST credits in TRAN-1 since last date prescribed by the Court (June 30, 2020) is approaching fast.