Big relief for businesses as SC ruling opens window for taxpayers to claim pre-GST credits

In a landmark decision that could free up hundreds of crores of rupees in input tax credit (ITC), the Supreme Court on Friday allowed all affected taxpayers to claim accumulated ITC accrued in the pre-GST indirect tax regime in 60 days ending October 30. GST Network portal to provide facility for all assesses to claim transitional credit from September 1 till October 30, the SC said disposes off batch of 400 appeals. All such assesses, which analysts said may be in thousands, can claim the benefit whether they have filed Writ petition or not.

The court has given 90 days to officers thereafter to verify the claim of credit on merits and pass appropriate order. The Central Board of Indirect Taxes and Customs have been asked to issue relevant directions to field officers. “The transitional credits are vested rights and these developments will help thousands of taxpayers across the country who were struggling to get the credit with respect to transitional rights due to technical or non-technical glitches”, said Abhishek A Rastogi, partner at Khaitan and Co, who was representing and arguing for the tax payers.

Earlier, Delhi High Court decision had gone significant steps ahead to held that the benefit must not be restricted only to the writ petitioners but to all aggrieved taxpayers and this aspect has now become part of the Supreme Court order, added Rastogi who had argued in case of Brand Equity before Delhi High Court and now before the Supreme Court.

The Petitioners were unable to file Form GST TRAN-1 within the due date prescribed under Rule 117 of the Central Goods and Services Tax Rules, 2017 (CGST Rules) to carry forward accumulated input tax credits accrued in the pre-GST indirect tax regime, resulting in denial of credits due to them.