The Kerala High Court, in its ruling, permitted the correction of revised TRAN-1 and TRAN-2 filings and held that a bona fide error cannot defeat a claim for transitional input tax credit under Section 140 of the CGST Act.
The matter arose when M/S Pinnacle Motor Works Pvt. Ltd., a registered dealer, filed TRAN-1 in December 2017, claiming transitional input tax credit of ₹88,04,678.87, and TRAN-2 claiming ₹2,01,681. Pursuant to directions issued by the Supreme Court of India permitting the reopening of the TRAN filing window, the petitioner submitted revised TRAN-1 and TRAN-2 in October 2022. However, in the revised TRAN-1, the petitioner reported only ₹6,84,886 and declared a nil amount in TRAN-2.
The department moved because the revised filing superseded the earlier claims. U/s 73(9) of the CGST Act, an assessment order was passed refusing the earlier transitional credit based on the fact that the revised forms exhibited a lower number. Also, the recovery proceedings were started.
The counsel of the applicant claimed that at the time of submitting the revised forms, it was under the impression that merely additional claims needed to be entered and that the amounts earlier declared in 2017 need not be repeated. They furnished that the omission was a bona fide error and asked for a chance to rectify the revised filings.
The Council of the State mentioned that the writ petition was not kept as the applicant did not submit a regulatory appeal within the time mentioned. They said that the revised filings nullified the original claims and that the credit was incorrectly taken.
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Justice Ziyad Rahman A.A. cited that the relief asked via the applicant, namely permission to correct the revised TRAN forms, was within the authority of the regulatory authorities under the CGST Act and can be allowed in exercise of writ jurisdiction. The Court mentioned that in these situations, the existence of another remedy shall not bar the writ petition.
The Court on merits stated the verification via the Central Tax Authority had determined the applicant qualified for transitional credit to the scope of Rs 69,31,718.31 out of the original claim. The Court said that it was not possible that a taxpayer with the intent lessen a credit claim during the filing of a revised form. The situation shows a bona fide mistake.
The Court mentioned that against the applicant, no allegation of tax evasion was raised and that the refusal of a chance to correct the error shall result in double taxation.
The assessment order and the consequential recovery notice have been quashed by the Court. It asked GSTN to allow the applicant to correct the revised TRAN-1 and TRAN-2 by incorporating the original claims made in 2017. The assessing authority was asked to reconsider the case after allotting a chance of hearing and to pass fresh orders within the law.
| Case Title | M/S Pinnacle Motor Works Pvt. Ltd. vs. Deputy Commissioner (Adjudication) |
| R/Special Civil Application No. | WP(C) NO. 21609 OF 2024 |
| For Petitioner | SMT. Ammu Charles, and Sri. K.Srikumar |
| For Respondent | Smt. Preetha S. Nair, and Shri. V. Girishkumar |
| Kerala High Court | Read Order |
