TRAN-01 pushed to 31st March, CGST Act amended

CBIC has extended the date of filing the form TRAN-01 to 31st March 2020 from the earlier date of 31st December 2019. A CGST order number 01/2020 dated 7th February 2020 was passed to give effect to the extension. 

The extension is available to all those registered taxpayers who earlier faced technical difficulties while trying to file TRAN-01 on the government portal. The due date of TRAN-01 was extended a couple of times since its original due date of 30th September 2017 for those who faced the technical glitch. Earlier, the dates were extended to 31st March 2019 and further to 31st December 2019. Accordingly, TRAN-02 could be filed by 31st January 2020.

Businesses who had the CENVAT credit balance under the pre-GST regime could utilise such credit under the GST regime on some conditions. They had to file TRAN-01 form and thereafter submit the form TRAN-02 within one month. The TRAN-02 form includes the details of inputs in stock as on 30th June 2017. It also covers cases of unregistered persons under the pre-GST regime and those who do not possess the invoice documents.

There were several reasons for the delay by taxpayers to submit the transition forms to declare their tax credits availed under erstwhile laws. One of them was the seemingly difficult task of reconciling transitional differences while closing the tax filings under the pre-GST regime. Furthermore, the GST system was still new to them. With a lot of tweaks in the procedure, they found it overwhelming to adapt to the changes easily.

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It is interesting to see a parallel development during the Union Budget 2020. In the backdrop of several taxpayers approaching the High courts to seek further time for filing TRAN-01 and TRAN-02, a flaw was fixed in the CGST Act. 

Earlier, the CGST act did not impose time restriction to avail the pre-GST tax credits. Instead, the CGST rules specified the form and time limit. The taxpayers based their argument by defending that the Act supersedes any inconsistency found between the Act and the regulations. Accordingly, several High courts passed orders favouring the taxpayer.

This series of judgments made the GST Council realise that the flaw must be fixed in the law. Accordingly, the Union Budget 2020 made a significant amendment to section 140 of the CGST Act, governing the transitional provisions. It fixed the loophole by adding that the tax credit balance can be carried forward to the current GST regime within the time limit prescribed in rules. The change applies retrospectively from 1st July 2017.

Consequently, taxpayers will not have recourse if they miss the 31st March 2020 deadline. Accordingly, they will not be able to challenge in the court of law based on this line of argument. Therefore, it is advised that they file their forms if pending so far within the stated deadline.

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