Rajasthan HC: Unutilised ITC Can’t be Denied Due to Non-Availability of Form ITC-02A

A division bench of the Rajasthan High Court directed the department (respondent) to allow the Input Tax Credit (ITC) of more than Rs 2.5 crore through the next GSTR-3B return despite the non-availability of Form ITC-02A on the Goods and Services Tax (GST) Portal.

Pacific Industries Ltd (appellant) started a new business unit, which came into effect on 16.04.2019. Hence, the appellant planned to transfer the unutilised ITC to the new businesses using Form ITC-02A. As per the GST rules, the appellant had to file Form ITC-02A within 30 days from the date of new business unit registration. However, the appellant couldn’t do so as the required ITC-02A was not available on the portal for 30 days from the date of new business registration.

Also, the form was not available even when the appellant had filed this writ petition. Consequently, the petitioner was denied the opportunity to transfer the unutilised ITC of more than Rs 2.5 crore. 

The appellant submitted to the court that they had uploaded a manual copy and submitted it to the Deputy Commissioner, CTO Ward, A-Circle Udaipur on 14.05.2019. However, the department did not accept the manual request.

The division bench observed that the respondent was not in a position to dispute the fact that Form ITC-02A was not available on the portal within 30 days from the registration of the new business unit. Hence, the petitioner was genuinely and bonafide prevented from filing Form ITC-02A.

The High Court allowed the relief to the petitioner and held that the department had failed to acknowledge and transfer the ITC worth more than Rs 2.5 crore. Hence, not allowing the petitioner to utilise the ITC for the new business unit according to CGST Rule 41A is unjust, illegal and arbitrary.

Therefore, the division bench of the High Court comprising Mr Justice Sandeep Mehta Mr Justice Vinod Kumar Bharwani stated that the writ petition deserves to be allowed, and the department is directed to allow the ITC in favour of the petitioner. Also, the petitioner shall be entitled to avail the ITC of more than Rs 2.5 crore through the next GSTR-3B return.

For any clarifications/feedback on the topic, please contact the writer at dvsr.anjaneyulu@cleartax.in

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