Govt notifies GST law changes, lack of clarity on transitional claims

Govt notifies GST law changes, lack of clarity on transitional claims

With the government notifying the GST-related changes made in the Finance Act, 2020, the recent Delhi high court judgment allowing taxpayers till June 30 to claim the transitional credit would be nullified. The Finance Act, earlier this year, had amended relevant sections of the CGST Act, which would come into effect from Monday.

Earlier this month, the Delhi high court had allowed taxpayers registered under GST to claim accumulated CENVAT credit from pre-GST regime till June 30, 2020, and noted that the benefit of transitional credit will be applicable for three years (since launch of GST on July 1, 2017) which is the period mentioned in the limitation Act.

Under the GST Act, taxpayers were allowed to carry forward input tax credits from excise and service tax regime by filing TRAN-1 form. Although, the original deadline expired in September 2017, the government granted several extensions till December 27, 2017.

Further, taxpayers who couldn’t file the claim due to technical glitch in the system were allowed to do so till March 31, 2020.

“This retrospective amendment needs to be challenged at appropriate time. There is no stay on the Delhi high court order and hence the taxpayers who have taken the benefit of the court’s order before the date of the notification are in clear safe zone,” said Abhishek A Rastogi, partner at Khaitan & Co, who argued for the the lead petition on this issue. He added that the amendment will have to be tested on the constitutional validity as any retrospective amendment is after the court order.