Non-Availability Of Form GST ITC-02A On GSTN Portal: Rajasthan High Court Allows ITC In GSTR-3B

The petitioner, a registered dealer under the GST regime, with two industrial units registered in Udaipur. The Union of India prescribed Form GST ITC-02A under the Central Goods and Service Tax Rules, 2017 which had to be uploaded on the GSTN Portal through which, unutilised input tax credit was permitted to be transferred to a newly registered unit of the assessee within the same state. The State of Rajasthan has also prescribed the Form GST ITC-02A by amending the Rules of 2017.

Prior to 01.02.2019, a person having various business verticals within a state was not entitled to seek separate registrations for multiple places of business. However, by effect of the amendment dated 01.02.2019, a person having multiple businesses at different places became entitled to separate registrations for each location where their business verticals were being operated.

As a single registration was permissible under the unamended provision, the tax liability and the input tax credit accrued to the said single registration. After the coming into force of the amendment dated 01.02.2019, separate registrations as per location of business were allowed, and accordingly, the tax liability and input tax credit would be calculated individually for each unit. Pursuant to this amendment, Rule 41A was introduced in the GST Rules of the Centre as well as the States vide notification dated 29.01.2019.

Rule 41A prescribes the transfer of an unutilised input tax credit lying in the Electronic Credit Ledger of a registered unit to the newly registered unit of an assessee within the same state as per Section 25(2) of the CGST Act. In order to give effect to this mode of filing ITC credit, Form GST ITC-02A was prescribed, which was to be submitted on the GSTN Portal within a month of obtaining the new registration as per Section 25(2) of the CGST Act so that the unutilised input tax credit could be transferred from the previously registered unit to the newly registered unit of the assessee.

The petitioner submitted that the Form GST ITC-02A was not available on the GSTN Portal for the entire period of 30 days from the registration of its separate business verticals and even till the date of filing of the instant writ petition, as a consequence of which the petitioner was denied the opportunity to transfer the unutilized input tax credit to its new registration, which became effective on 16.04.2019. The petitioner claims to have uploaded a manual copy and submitted it to the Deputy Commissioner, but it was not accepted.

The petitioner claimed to be suffering immense financial difficulty on account of not being able to use the unutilised input tax credit of GST to fulfil the tax liability of the new business registration.

The petitioner also raised this issue with the GST Helpdesk, and a ticket was issued. In response to the ticket, the petitioner was forwarded a tutorial link. However, the tutorial link was regarding the filing of the Form GST ITC-02 and not the Form GST ITC-02A. The petitioner submitted another letter to the Deputy Commissioner raising an issue regarding Form GST ITC-02A and the steps taken by the petitioner to submit the form, but no response was received.

Counsel for the petitioner urged that the petitioner was deprived of the opportunity to furnish the Form GST ITC-02A only for the reason that the form was not available on the GSTN Portal.

Counsel on behalf of the GST Department opposed the submissions of the petitioner's counsel. However, he too was not in a position to dispute the fact that Form GST ITC-02A was not available on the GSTN Portal within the stipulated period of 30 days from the date of registration of the petitioner's new business vertical; hence, the petitioner was genuinely and bonafidely prevented from uploading it.

The court observed that the department failed to acknowledge and transfer the input tax credit to the tune of Rs. 2,58,03,590 accruing to the petitioner pursuant to the registration of its new business unit in accordance with Rule 41A of the GST Rules. The action of the department was grossly illegal, arbitrary and unjust.

"The respondents are directed to regularise the input tax credit in favour of the petitioner as per entitlement. The petitioner shall be allowed to avail the Input Tax Credit of Rs.2,58,03,590/- through the next GSTR-3B return," the court said.

Case Title: Pacific Industries Ltd. Versus Union Of India | D.B. Civil Writ Petition No. 12190/2019

Citation: 2022 LiveLaw (Raj) 113

Dated: 15/03/2022

Counsel For Appellant: Sr. Advocate Sanjay Jhanwar

Counsel For Respondent: Advocate Rajvendra Sarswat

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