Bombay High Court Allows Nuvoco Vistas To File GST TRAN-1 For Availing Transitional ISD Credit

The Bombay High Court has allowed the assessee, Nuvoco Vistas, to file GST TRAN-1 to avail of the transitional Input Service Distributor (ISD) credit of service tax.

The division bench of Justice K.R. Shriram and Justice A.S. Doctor has observed that the GST TRAN-1 or revised GST TRAN-1 filed by the units or offices will be based on the manual ISD invoices to be issued by the petitioner's ISD, subject to aggregate credit not exceeding the ISD credit available to the petitioner.

The petitioner/assessee submitted that the petitioner attempted distribution of credit transitioned/reporting of the distributed credit by the ISD registration to their units/offices. However, they were not able to distribute, recognize, and report the distribution, as there were procedural and functional difficulties in relation to the GST forms and portal.

The department contended that the petitioner has wrongly migrated the erstwhile ISD registration to the GST regime and transitioned the credit which is prohibited as per the CGST Act, 2017. ISD registration under the GST regime does not enjoy the status of an assessee obtaining registration under GST for carrying out its business. ISD registered under GST is not eligible for ITC under Section 16 as it is not using the inputs in the course of or furtherance of its business for making taxable supplies as ISD.

The department stated that the petitioner has erred in comparing the erstwhile ISD with the normal service tax assessed in light of Section 140 (Transitional arrangements for input tax credit) of the CGST Act read with Rule 39 (Procedure for distribution of input tax credit by an input service distributor) of the CGST Rules.

The court relied on the decision of the Supreme Court in the case of Union of India & Another V/s. Filco Trade Centre Pvt. Ltd. The Apex Court directed the GST Network to open the common portal to file/rectify TRAN-1 and TRAN-2 for a period of two months, i.e., with effect from 1st September 2022 to 31st October 2022 to enable the different private parties to avail Transitional Credit.

As determined by the court, the petitioner may take advantage of this window and file a GST TRAN-1 or revised GST TRAN-1 at the units or offices that are registered under the CGST Act and/or State Acts, as the case may be.

Case Title: Nuvoco Vistas Corporation Ltd. Vs. The Union of India and Ors.

Citation: Writ Petition No. 437 Of 2020

Date: 17.11.2022

Counsel For Petitioner: Nand Kishore

Counsel For Respondent: Anjani Kumar Singh

Citation: 2022 LiveLaw (Bom) 459  

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