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.
Read More: GST - Gujarat High Court: Interest on delayed GST refund is payable even for system glitch - Interest is mandatory and payable once the refund is sanctioned beyond 60 days, regardless of the reason for delay [Order attached]
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.
Order Date: 10 September 2025
Facts -
- The petitioner, a registered dealer under the KVAT Act, migrated to GST on 01.07.2017 and sought to carry forward unutilised ITC by filing Form TRAN-1 under Section 140(1) of the CGST Act.
- The petitioner attempted to file TRAN-1 on 30.11.2022, within the extended deadline fixed pursuant to Union of India v. Filco Trade Centre Pvt. Ltd. (2022), but the portal displayed validation errors relating to invoice booking dates.
- The petitioner immediately raised a grievance with the GST helpdesk and informed the jurisdictional officer, but the issue remained unresolved.
- The department denied the benefit of transitional credit on the ground that TRAN-1 was not successfully filed within the time limit.
Issue -
- Whether denial of transitional ITC under Section 140 of the CGST Act is justified when the taxpayer attempted to file TRAN-1 within the permitted timeline but was prevented by a portal-related technical error?
Order -
- The Court held that the petitioner had clearly demonstrated a bona fide attempt to file TRAN-1 within the permitted period, and that denial due to technical errors of the portal was unjust and contrary to the scheme of the Act.
- The purpose of Section 140 is to preserve accrued credits; such rights cannot be lost merely because of a systemic technical error beyond the taxpayer’s control.
- Following the Supreme Court’s direction in Filco Trade Centre Pvt. Ltd., the Court ordered GSTN to reopen the portal or permit manual filing of TRAN-1 within four weeks.
- The department was further directed to verify the correctness of credit details and allow transitional ITC if found eligible.
