Pre-GST CENVAT credit available till June-end revised

By: |
May 6, 2020 2:45 AM

The Delhi High Court on Tuesday allowed taxpayers registered under Goods and Services Tax (GST) to claim accumulated CENVAT credit from pre-GST regime till June 30, 2020, and noted that the benefit of transitional credit will be applicable for three years (since launch of GST on July 1, 2017) which is the period mentioned in the limitation Act.

Under the GST Act, taxpayers were allowed to carry forward input tax credits from excise and service tax regime by filing TRAN-1 form.

The Delhi High Court on Tuesday allowed taxpayers registered under Goods and Services Tax (GST) to claim accumulated CENVAT credit from pre-GST regime till June 30, 2020, and noted that the benefit of transitional credit will be applicable for three years (since launch of GST on July 1, 2017) which is the period mentioned in the limitation Act.

Under the GST Act, taxpayers were allowed to carry forward input tax credits from excise and service tax regime by filing TRAN-1 form. Although the original deadline expired in September,2017, the government granted several extensions till December 27, 2017. Further, taxpayers who couldn’t file the claim due to technical glitch in the system were allowed to do so till March 31, 2020.

While the rule 117 under the GST Act mandated a deadline for claiming the credit, taxpayers have argued in court that input tax credit was a right and not a taxpayer concession, which made a deadline ultra vires.

“The time limit prescribed under Rule 117 was challenged before the Delhi High Court. The Delhi High Court in the virtual hearing held today clearly held that the prescribed time limit will not be applicable as it is directory and not mandatory. The court also ordered that extended time limit of three years should be applicable not only qua the petitioners but to all other petitioners who are facing the hardship of transitional credits”, said Abhishek A Rastogi, partner at Khaitan & Co, who argued for the petitioner Brand Equity Treaties.

Since the early days of GST, the government has suspected that large amount of transitional credit was being availed illegally. The indirect tax department had also conducted an analysis on nearly Rs 2 lakh crore of transitional credit claimed till the original deadline.

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