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GST: Now taxpayers can claim transitional credit until June 30

Dipak Mondal     May 5, 2020

In a landmark judgment that may have a severe impact on both state and Central government revenues, the Delhi High court has allowed all taxpayers to claim transitional credit accumulated before the implementation of the GST by June 30, 2020.

In the order passed today, the Delhi High Court held that period of 90 days for claiming input tax credit is directory and therefore, period of limitation of three years under the Limitation Act would apply. The Court has directed the revenue department to allow all assessees to claim input tax credit by June 30, 2020. The order would apply to all taxpayers who could not file TRAN-1 and claim input tax credit.

This is a significant judgment on two accounts. One, it extended the period for claiming input credit from 90 days to three years. Second, the judgment is applicable to all taxpayers and not just the petitioner," says Abhishek Rastogi, partner, Khaitan & Co. Rastogi appeared for the petitioner, Brand Equity, a part of the Bennett Coleman Group of companies (Times Group), in the case.

Initially, as per the GST law, taxpayers could claim their transitional credit -- input tax credit accumulated on all indirect taxes prior to implementation of GST -- till December 2017. But later the same was extended on a case-to-case basis for technical errors in filling the transitional credit form TRAN-1.

The latest court order now gives a blanket benefit to all taxpayers.

Rajat Mohan, partner, AMRG & Associates, says normally a court order applies to the petitioner, this judgment is significant as the verdict applies to all taxpayers.

While the verdict will benefit thousands of taxpayers, it will hit the state and Central governments' exchequer unless the revenue department gets a stay on the order from the Supreme Court.

However, Abhishek Rastogi of Khaitan & Co says that it will not be easy for the revenue department to get a stay before June 30, and taxpayers can now claim the transitional input tax credit based on the high court decision.

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