GST: SC allows taxpayers to claim pre-GST accumulated ITC in a 60-day window


In a judgement that could benefit many companies, the Supreme Court ruled that businesses that were unable to claim tax credits when the indirect tax system switched to the Goods and Services Tax (GST) would be able to do so. A tax credit is a component of a company’s tax payment that can be applied to offset a subsequent tax obligation.

When India moved to the GST regime in 2017, companies had to transition the credit sitting on their books. So, the closing balance in the old tax regime would become the opening credit balance under GST. When India moved from the old indirect tax regime to GST, a one-time transition of credit was allowed. That is, companies could set off part of the taxes paid during the old tax regime against future GST liabilities.

Many companies claimed that they had simply forgotten to claim the transitional credit. The case reached the Delhi High Court, which ruled in favour of the taxpayers. On Friday, the Supreme Court division bench of Justice Abdul Nazeer and Justice JK Maheshwari ruled in the Brand Equity Treaties Limited versus Union of India case that all companies should be able to get transitional credit, whether or not they have approached the court of law.

The court also directed the government to open a common portal for all taxpayers to claim the credit within 60 days – from September 1 to October 30.

Companies could claim the transitional credit through TRAN forms. The SC said Tran 1 and Tran 2 were GST forms that allowed the assessees to transition from the pre-GST credit to the GST regime.

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