The GST Council has directed a committee for IT grievance redressal to quickly draw up a solution to give relief to the industry by allowing amendment of goods and services tax (GST) return mandated for carrying forward tax credit from the previous regime for non-IT related errors as well.
Thousands of crores of tax credit claimed by businesses have been denied because of errors in the filing of returns, prompting many to approach judiciary. A government official told that the council has approved changes in cases where the error is not IT related. The grievance committee develop a standard operating procedure for all the cases where high courts have given a direction, the amount has been wrongly entered or the concerned jurisdictional commissioner has made a recommendation. The forms TRAN1 and TRAN2, which are specified for claiming past credits, can now be amended to allow this.
Many taxpayers filed writs in high court since GST law does not provide for any appeal on issues related to TRAN1 or TRAN2 and also secured favourable orders holding the view that bona fide errors should be considered by the government.
Pratik Jain, national indirect taxes leader, PwC said that this move will help companies to claim the additional amount which they could not claim due to inadvertent errors under TRAN1, without going to courts.
Businesses looking to claim tax credit of the pre-GST period under GST could file TRAN1. The GST Council had allowed a liberal scheme for claiming credit in lieu of taxes paid under the previous regime against GST liabilities. Businesses could claim credit even if they did not have proof of payment under the deemed benefit provision. However, large transition credit claims, which pulled down overall GST collections, led to increased vigil. Any changes to the TRAN 1 were thus not allowed on non-IT related issues. Reports of fraudulent credit claims also led to inquiries into transitional credit claimed by businesses to ascertain if they were genuine. MS Mani, partner, at Deloitte India said that the transition credits have been challenging for all businesses and the IT grievance redressal committee should ideally be considering all issues for the entire period instead of a sunset period and clarify that all genuine errors, whether arising from the GSTN portal issues or committed by the taxpayers would be condoned unless there is mala fide intent.
