GST

Raj. HC allows ITC in GSTR 3B due to non-availability of Form GST ITC- 02A on the GST Portal

Due to the non-availability of Form GST ITC- 02A on the GST Portal, the Rajasthan High Court allowed the Input Tax Credit under GST in GSTR-3B. The petitioner was deprived from availing the ITC to the tune of 2, 58, 03,590 rupees through Form GSTR-3B, hence the petitioner approached the Court through writ petition under Article 226 of the Indian Constitution.

Case in Brief- Non-availability of Form GST ITC- 02A

The petitioner in this case is a registered dealer under the GST regime having two industrial units in Udaipur. The union of India prescribed form GST ITC-02A under CGST Rules 2017 which was required to be uploaded on the GST portal which would have allowed transfer of unutilised input tax credit to a newly registered unit of the assessee within the same state. Rajasthan had also prescribed this form by making amendments to the CGST Rules 2017.

Know the law

Before 2019, a person with various business verticals in a state could not seek registration separately for multiple place of business however an amendment was made on Feb 2019 which allowed persons with multiple place of business at different places to obtain separate registration for each location where their business operated. Under the unamended provision, the tax liability and the input tax credit accrued to the said single registration. After the amendment was introduced, separate registrations were allowed and accordingly, the tax liability and input tax credit was individually calculated for each unit. Further, in accordance to this, Rule 41A was introduced under the GST Rules of the Centre and State.

Rule 41A provides for transfer of an unutilised input tax credit from the electronic credit ledger of a registered unit to the newly registered unit of an assessee within the same state. With a view to give effect to this mode of filing ITC credit, the Form GST ITC- 02A was introduced which was required to be submitted on the GSTN portal within a month of obtaining new registration according to Section 25(2) of the CGST Act so that the unutilised ITC could be transferred from earlier registered unit to the newly registered unit of the assessee.

Petitioner’s Submission

The petitioner submitted before the hon’ble HC that the Form GST ITC -02A was unavailable on the GSTN portal for 30 days from the registration of its separate business vertical and even till the filing of the petition, due to which the petitioner could not transfer the unutilised ITC credit to its new registration. He further claimed to have uploaded a manual copy and submitted it to the Deputy Commissioner. However, it was not accepted by the Deputy Commissioner.

The petitioner further submitted how he had faced severe financial difficulty as he wasn’t able to use the unutilised ITC of GST to fulfil tax liability of the new registration. The petitioner contended that he had raised this issue with the GST helpdesk and a ticket was issued and the petitioner was forwarded a tutorial link however it turned out to be a tutorial link on filing Form GST ITC -02 instead of Form GST ITC-02A. Then the petitioner sent another letter to the deputy commissioner regarding the same issue but no response was obtained.

The counsel for the petitioner argued that the petitioner was devoid of the opportunity to furnish the form GST ITC -02A only because of its non-availability on the GSTN portal.

Respondent’s Argument

The counsel representing the GST department argued while opposing the submissions made by the petitioner. However, he didn’t dispute the fact that Form GST ITC- 02A was unavailable on the GSTN portal for 30 days from the registration of its separate business vertical and even till the filing of the petition and therefore petitioner was genuinely prevented from uploading it. It was also not disputed that the petitioner manually submitted the form to the Deputy Commissioner.

Courts’ Observation and Final Order

The court observed that the GST department failed to acknowledge and transfer the ITC to the tune of said amount accruing to the petitioner in relation to the registration of its new business unit. The court termed the action of the GST department as grossly illegal, arbitrary and unjust.

Therefore the writ petition was allowed and the court directed the respondents i.e., the GST department to regularise the input tax credit in favour of the petitioner as per entitlement. Further, the petitioner was allowed to avail the ITC of 2,58,03,590 rupees through the next GSTR 3B.

Conclusion

Under the GST law^[1] a person can transfer any unutilised balance of ITC to a new branch in the ratio of the value of assets within 30 days from obtaining the new registration. This transfer is done by filing Form GST ITC -02A. However, in the present case the assessee failed to do so due to non-availability of the said form on the GST portal.  Hence the HC acceded to the request of petitioner and allowed the petitioner to avail the ITC of 2,58,03,590 rupees through the next GSTR 3B.

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