CBIC issues guidelines for verification of transitional credit claims under GST

Recently, the GST Network (GSTN) has reopened the window for taxpayers to claim transitional credit under the Goods and Services Tax (GST) law from 1st October 2022 to 30th November 2022.

Any taxpayer migrating from the pre-GST regime and missed claiming a transitional tax credit under VAT, service tax or excise law due to technical glitches can do so during the above period. Such transitional credit can be reported in Form TRAN-1 and TRAN-2 on the GST portal.

Once reported, it gets credited to the taxpayer’s electronic credit ledger upon the jurisdictional officer’s verification. It will be carried out in 90 days, i.e., from 1st December 2022 to 28th February 2023. Such verification begins earlier than the date the filed or revised TRAN forms are made available on the back office system or the date of receiving a self-certified downloaded copy.

The CBIC issued a fresh CGST Circular No.182/14/2022-GST on 10th November 2022. Guidelines are provided for two scenarios- filing transitional credit forms for the first time and revising already filed ones. The following are the highlights from the Circular-

  • Apart from filing or revising on the GST portal, the applicant must submit a self-certified downloaded copy of filed or revised TRAN-1 or TRAN-2 with the declaration in Annexure-A to the jurisdictional tax officer, as per the instructions in the CGST Circular No.180/12/2022 issued on 9th September 2022.
  • For revised TRAN forms, the officer may reject the application if no changes are found after giving the applicant a reasonable opportunity to be heard through an order.
  • The officer doing verification shall depend upon whether the applicant falls under the Central or state jurisdiction.
  • Annexure-I of the guidelines applies to CGST Tran credit. In contrast, the applicants must refer to respective state/UT guidelines for SGST Tran credit. Suppose there are both components, depending on whether the administration comes under the Central state jurisdiction. In that case, the tax officer has to refer to the respective tax officer under the other component with a list of GSTIN/ARN for weekly verification, giving them ten days. The jurisdictional officer will complete verification within seven days of receiving such a report from the counterpart officer.
  • Suppose any appellate or adjudication proceedings are pending. In that case, the officer shall check the grounds for not admitting the transitional credit in the notice or order.
  • The jurisdictional officer who completes verification must report it in the format in Annexure II of the guidelines. The amount of admission or rejection with reasons must be recorded. Usually, the jurisdictional officer must issue a report within fifteen days of the personal hearing and cannot exceed 90 days in any case.
  • The applicant may be called to provide additional information or supporting documents, such as GST returns or invoices.
  • Suppose there is any additional credit in the electronic credit ledger. In that case, the excess shall be demanded and recovered from the applicant with interest and penalty.

For further information on filling up every table of the Form TRAN-1, verification checklist, Annexure-I and II, you may refer to the CGST Circular No.182/14/2022.

For any clarifications/feedback on the topic, please contact the writer at annapoorna.m@clear.in

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