GST Update No 173 on glitches in transfer of credit to new unit

With the advent of GST, major

compliances have been digitised but

technology has its own disadvantages

too. It is often observed that the

amendments made in the GST Law is

not implemented on the GST portal

which leads to delay in grant of

benefits to the taxpayers. It is very

common that the utilities needed to

operationalise the provisions is not

updated timely on the GST portal due

to which assessees have to suffer and

knock the doors of High Court. The

present update seeks to discuss the

decision delivered by Rajasthan High

Court in the case of PACIFIC

INDUSTRIES LTD V/S UNION OF INDIA

wherein the benefit of transfer of

credit was being denied for non-filing

of FORM GST ITC-02A which was

actually not available on the GST portal.

The analysis of this decision is the

subject matter of discussion of our

present update.

The petitioner is a registered dealer

having industrial units in Udaipur. It

was contended that after the

amendment dated 01.02.2019,

separate registrations as per different

locations of business were allowed and

therefore, separate tax liability and

input credit was calculated for each

unit. Furthermore, Rule 41A was also

introduced vide notification dated

29.01.2019 which prescribes transfer of

unutilised Input credit to other unit

within the same state of the assessee.

Therefore, Form GST ITC-02A came into

existence. The petitioner raised

grievance that since Form GST ITC-02A

was not available on the portal, they

were not given an opportunity of

transferring Input Tax Credit. The

petitioner uploaded manual copy and

submitted it to the Jurisdictional

Department. It was contended that

immense financial difficulty was being

faced due to non-transfer of the credit

balance to the electronic credit ledger

of the petitioner. The petitioner stated

that grievance was raised with the

helpdesk in response of which a

tutorial link was generated. However,

the link was regarding filing form ITC-02

and not ITC-02A. Later on, another

letter was submitted to the

commissioner regarding the same issue

but no response was received thereto.

The Counsel for the department

contended that the petitioner failed to

furnish Form GST ITC-02A within 30

days from date of newly registered unit

CA. PRADEEP JAIN

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and so they cannot transfer the credit

to the new unit.

The court held that the facts of the

case clearly showcases that the

petitioner was deprived of the

opportunity of furnishing Form GST ITC02A. Further, the petitioner diligently

completed his duty of informing the

same to the GST help desk by lodging a

grievance regarding the same.

Consequently, it was held that the

petitioner shall be allowed to avail

input tax credit in the GSTR-3B filed for

the next month.

The above decision is a welcoming

decision wherein the Hon’ble High

Court condoned non-filing of FORM

GST ITC-02A for transfer of credit to the

new unit on account of technical glitch

on the GST portal. The High Court has

upheld the established fact that input

credit which is legitimately earned by

the taxpayers should not be denied

merely because of procedural lapses or

due to technical glitches which

subsequently results in liquidity

constraints to the taxpayers. Reference

can be made to following decisions:

• EZZY ELECTRICALS V/S STATE OF

GUJRAT

• MEHAR TEX V. THE

COMMISSIONER OF CGST &

ORS. [W.P.(MD) NOS. 22996,

22999 & 23001 OF 2019 AND

W.M.P.(MD) NOS. 19733, 19736

& 19739 OF 2019 DATED 18

MARCH 2021]

It is hoped that the technical lapses on

account of non-updation of the GST

portal is being observed leniently by

the departmental authorities so that

unwarranted litigations can be avoided.

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GST Update No 173 on glitches in transfer of credit to new unit

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