Certificate was issued where credit was not reflecting Electronic Credit ledger as filed under Form-GST-TRAN-1.

Case Title: Indusind Media Communications Ltd. vs. Union of India

Court: High Court of Gujarat

Petition Number: Special Civil Application No. 14428 of 2018

Relevant Sections: Article 226 of Constitution of India; Section 16(4), Section 25(4) of CGST Act

Category of Dispute: Input Tax Credit (Transitional Credit)

Date of Judgement: June 19, 2019

Facts of the Case

1. The petitioner, Indusind Media Communications Ltd., sought a writ from the Gujarat High Court under Article 226 for directions to allow the transition and availment of Input Tax Credit (ITC) worth ₹5.21 crores which was duly reflected in TRAN-1 but not shown in the electronic credit ledger for Gujarat [Para 1].
2. The issue arose post the GST implementation when Petitioner No. 1 acquired the business of Petitioner No. 2, but the transitional credit could not be availed due to technical glitches in the GSTN portal [Para 2].
3. Identical matters were under litigation in the Delhi and Bombay High Courts regarding the same petitioner and issue [Para 3].

Question(s) in Consideration

1. Whether the petitioners are entitled to claim transitional credit (ITC) of ₹5.21 crores not reflected in the Gujarat electronic credit ledger despite having submitted TRAN-1? [Para 1]
2. Whether GST authorities can be directed to accept GSTR-3B returns and related forms manually to give effect to such transitional credit, bypassing technical limitations of the portal? [Para 3]
3. Whether penalty, interest, and late fees can be waived for non-filing of returns caused due to non-availability of transitional credit? [Para 1]

Observations of the Court

1. The Court took note of the Delhi High Court order in W.P.(C) No. 8691/2018, which acknowledged the technical failures preventing the petitioner from availing the transitional credit and allowed manual filing as a temporary measure [Para 3].
2. It also referred to the Bombay High Court’s order in W.P.(C) No. 2229/2018, which held that the credit available as on 01.07.2017 must be allowed to be distributed among locations/branches despite GSTN system issues [Para 3].
3. Recognizing these precedents, the Gujarat High Court agreed that such ITC entitlement was a vested right and should not be defeated due to technical glitches [Para 3].

Judgement of the Court

1. The Gujarat High Court directed the jurisdictional Commissionerate in Gujarat to verify the credit claimed and issue the requisite certificate enabling the credit distribution [Para 4].
2. This verification and certification were to be completed within four weeks from the receipt of the order [Para 4].
3. The matter was posted for further hearing on 24th July 2019 [Para 5].

Between Fine Lines

• This case affirms that technical glitches on the GSTN portal cannot curtail the statutory right of transitional credit.
• High Courts may direct manual procedures to allow ITC claims when online systems fail.
• Inter-state transfer of credit after business restructuring must be honoured if compliant with Section 25(4).
• The credit available in TRAN-1 is legally protected and must reflect in the credit ledger.
• Relief is possible even in pending matters if supported by previous court directions on similar facts.

Summary of Referred Cases

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