HC Raps revenue for failing to act on a transitional-credit claim despite directions

Last updated: 25 November 2021

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The Gujarat High Court has ordered a Revenue Nodal Officer to appear before it for failing to comply with previous court directions. These directions, issued in September 2019 and upheld after review applications were rejected, required the Nodal Officer to allow M/s Siddharth Enterprises to file GST TRAN-1 and TRAN-2 forms. This would enable the company to claim transitional credit for eligible duties on inputs held in stock. Despite the court's clear instructions and the passage of over two years, the department had not facilitated the filing of these forms.

Court :
Gujarat HC

Brief :
In M/s Siddharth Enterprises through Anr. v. The Nodal Officer [TS-625-HC(GUJ)-2021-GST dated October 14, 2021] Hon'ble Gujarat High Court observed that the direction of this Court to allow filing of declaration in form GST TRAN-1 and GST TRAN-2 by M/s Siddharth Enterprises ("the Petitioner") so as to enable them to claim transitional credit of the eligible duties has not been followed by the Nodal Officer and thus directed him to appear before the court.

Citation :
TS-625-HC(GUJ)-2021-GST dated October 14, 2021

In M/s Siddharth Enterprises through Anr. v. The Nodal Officer [TS-625-HC(GUJ)-2021-GST dated October 14, 2021] Hon'ble Gujarat High Court observed that the direction of this Court to allow filing of declaration in form GST TRAN-1 and GST TRAN-2 by M/s Siddharth Enterprises ("the Petitioner") so as to enable them to claim transitional credit of the eligible duties has not been followed by the Nodal Officer and thus directed him to appear before the court.

A common judgment was delivered by the Hon'ble Gujarat High Court on September 6, 2019 in which all the four writ applications were allowed and Department was directed to permit the Petitioner to allow filing of declaration in form GST TRAN-1 and GST TRAN-2 so as to enable him to claim transitional credit in terms of Section 140(3) of the Central Goods and Services Tax Act, 2017 ("the CGST Act").

Observed that, after passing the above-mentioned judgment four review applications were filed by the Nodal Officer which were rejected by this Court vide order dated February 14, 2020.

Further, observed that, the concerned authority did not abide by the directions given by this Court and even after two years the order of the Court has been ignored by the Department.

Pointed that, all that is expected by the Department is to open the portal and allow the Petitioner to file declaration in Form GST TRAN-1 and GST TRAN-2 so as to enable them to claim the transitional credit of the eligible duties in respect of the inputs held in stock on the appointed day in terms of Section 140(3) of the CGST Act.

Therefore, due to non-compliance of the order, directed the Nodal Officer to present before the Court.

FAQ :

The Nodal Officer failed to comply with the court's directions to allow M/s Siddharth Enterprises to file GST TRAN-1 and TRAN-2 forms, which are necessary for claiming transitional credit.

These forms are used to claim transitional credit for eligible duties on goods held in stock at the time of GST implementation, as per Section 140(3) of the CGST Act.

The court ordered the department to permit M/s Siddharth Enterprises to file GST TRAN-1 and TRAN-2 forms to enable them to claim transitional credit.

The Nodal Officer was summoned because the department had ignored the court's order for over two years and had not allowed the petitioner to file the required forms.