In a recent order dated September 10, 2025, the Kerala High Court addressed the issue of a registered dealer under the KVAT Act who faced technical difficulties when attempting to transition to the GST regime. The petitioner sought to carry forward unutilised Input Tax Credit (ITC) by filing Form TRAN-1, as stipulated under Section 140(1) of the CGST Act. Despite attempting to file the form on November 30, 2022, within the extended deadline set by a previous Supreme Court ruling, the petitioner encountered validation errors on the GST portal related to invoice booking dates.

Despite promptly raising the issue with the GST helpdesk and informing the relevant authorities, the problem remained unresolved. As a result, the department denied the petitioner the benefit of transitional credit, arguing that the TRAN-1 form was not successfully filed within the stipulated timeframe. The core issue was whether such a denial was justified when the taxpayer had attempted to comply within the permitted timeline but was hindered by a technical error beyond their control.

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The Court ruled in favor of the petitioner, emphasizing that the taxpayer had made a bona fide attempt to file the necessary documentation within the required period. The denial of transitional ITC due to technical errors was deemed unjust and contrary to the Act's purpose, which is to preserve accrued credits. As per the Supreme Court's guidance, the Court ordered the GST Network to reopen the portal or allow manual filing of TRAN-1 within four weeks. Furthermore, the department was instructed to verify the credit details and grant transitional ITC if eligible. This decision underscores the importance of addressing systemic technical issues to ensure taxpayers' rights are protected.