Claim transaction credit under GST
The business which has tried to file their TRAN-1 with effect from July 1, 2017, can claim their transitional credit, the date of commencement of their GST regime, on which the Delhi high court decided on Tuesday, Narrated and approved.
A division bench of justice Sanjeev Narula and justice Vipin Sanghi observes that the time limit for converting Cenvat credit to GST is a directory in nature. The court held that these rules could not be the result of the taxpayers’ right to convert to credit.
Who can claim transaction credit in GST till June 30?
All the taxpayers or persons who have GST Registration can claim transaction credit/input tax credit till 30 June.
GST Allows taxpayers
It was allowed at the time of commencement of GST, goods and service tax in 2017, that the taxpayers ensue, collected or accumulated tax credit under the previous law of indirect tax such as value-added tax.
However, the transition has been rolled out with technical glitches in the GST portal, which prevented many taxpayers from completing their filings.
Order of high court-
In an order passed on Tuesday, the high court stated that the 90 day period for claiming input tax credit is a directory and, therefore, a three year limitation period would apply under the limitation act. And allow taxpayers to claim transaction credit in GST till 30 June.
Which department was directed by the high court?
The court directed the department of revenue to allow all taxpayers to claim an input tax credit by June 30, 2020. This order will apply to all taxpayers who cannot file TRAN-1 and claim the input tax credit.
To whom does the high court decision apply?
This is an important decision that applies to two accounts.
One– it applies to increase the period for claiming input credit from 90 days to three years.
Second– the decision applies to all taxpayers, not just the petitioner.
What is the extended time limit?
The extended time limit is three years.
To whom the three-year time limit applicable?
The Delhi high court ordered that the time limit applies not only to the petitioner but also to all taxpayers or petitioners who are facing the issue of transaction credit.
Things to be remember
- The latest decision of court gives benefits to all taxpayers, it will hit the treasury of the state and central governments until the revenue department gets a stay on the supreme court order.
- However, it has become clear that it will not be easy for the department of revenue to take a stay before June 30, and taxpayers can now claim the transitional input tax credit till 30 June 2020 based on the high court ruling.
- The deadline set under Rule 117 was challenged before the Delhi High court.
- In a virtual hearing, the Delhi high court today categorically stated that the stipulated time limit would not apply as it is a directory and not mandatory.