The document discusses various transition provisions under the GST law relating to carry forward of input tax credit from previous tax regimes. It summarizes the Supreme Court orders regarding filing of Form GST TRAN-1 and TRAN-2 for transition of credit before the deadline of February 2022. It also discusses key sections of the CGST Act such as 140, 141 and 142 governing transition of credits for input tax, capital goods, inputs in stock, etc. and the forms and timelines for claiming such credits. Issues related to eligibility of certain duties and taxes for transition credit and discrepancies observed are also highlighted.

1. Transitional Provisions in GST
Circular No. 180/2022 dated 09.09.2022
Filing of TRAN 1/ TRAN2
Deepak Mata, Deputy Commissioner,
CC Office, Mumbai

2. Presentation Plan
Some important Transition Provisions in CGST Act/ Rules
Hon’ble Supreme Court order dated 22.07.2022 & 02.09.2022 in UOI vs M/s. Filco
Trade Centre Pvt. Ltd., SLP(C) No. 32709-32710/2018
A few questions of Law not decided by SC, and still pending
Circular No. 180-GST dated 09.09.2022 and GSTN Advisory dated 01.10.2022 on
Transition Credit

3. Legal Framework
CGST Act: Sections 139, 140, 141, 142
GST Transition Rules 117 to 121
Forms GST TRAN 1/ TRAN 2 / TRAN 3
Hon’ble Supreme Court order dated 22.07.2022 & 02.09.2022 in UOI vs M/s. Filco
Trade Centre Pvt. Ltd., SLP(C) No. 32709-32710/2018
Circular No. 180-GST dated 09.09.2022 and GSTN Advisory dated 01.10.2022 on
Transition Credit

4. Herculean Task?
Officers, within ninety days, will be required to verify the veracity of the
claim/transitional credit and pass appropriate orders thereon on merits after
granting appropriate reasonable opportunity to the parties concerned.
• Verify
• Take comments from the counterpart officer
• Give Notice…. Give PH
• Decide ……. Order
• Before 28.02.2022
Hon’ble SC in Misc Application No. 1545-46 of 2022 clarified that all questions of
law decided by the respective High Courts concerning Section 140 of the CGST
Act, 2017 read with the corresponding Rule/Notification or direction are kept
open.

5. Hon’ble SC orders dated 22.07.2022 & 02.09.2022 in UOI vs M/s. Filco
Trade Centre Pvt. Ltd
Kept all questions of law open
Not allowed to revise return under existing laws
Forms GST TRAN 1/ TRAN 2

6. Source: CAG Report No. 5 of 2022 ( GST)

7. CGST Act: Sections 140 –
Transitional Arrangement for
Input Tax Credit

8. Forms and table for transition credit
Form Table Legal Provision Transition Credit Component
TRAN 1
5a
Section 140(1) & 140(4)(a)
Closing balance of credit from the last legacy
returns
5b & 5c C, F, H/I Forms
TRAN 1
6a
Section 140(2)
Un-availed credit on capital goods- Central Tax
6b Un-availed credit on capital goods- State Tax
TRAN 1
7(a)A
Section 140(3), (4), (5) &
(6)
Credit on duty paid stock with invoices
7(a)B Credit on duty paid stock without invoices
7b Credit on duty paid goods with invoices- State
taxes
7c Credit on duty paid goods without invoices-
State taxes

9. Forms and table for transition credit ( Contd)
TRAN 1 8 Section 140(8) Transfer of credit by centrally registered units
TRAN 1
9(a)
Section 141
Details of goods sent as principal to the job worker
9(b) Details of goods held in stock as job worker on behalf of the
principal
TRAN 1
10(a)
Section 142(14)
Details of goods held as agent on behalf of the principal
10(b) Details of goods held by the agent
TRAN 1 11 Section
142(11)(c)
VAT paid Taken as SGST Credit or Service Tax paid as Central Tax
Credit
TRAN 1 12 Section 142(12) Details of goods sent on approval basis six months prior to 1st July
2017
TRAN 2 4 Credit afforded on stocks claimed without invoices

10. Explanation 1 : Eligible Duties [For sub-sections (1), (3), (4) and (6)]
(In respect of inputs held in stock and inputs contained in semi-finished or finished goods held in stock on appointed day)
Sr. Type of Duty Leviable Under Remarks
(i) Additional Duty of Excise
Section 3 of Additional Duties of Excise (Goods of Special
Importance Act) 1957
AED (GSI)
(ii) Additional Duty Section 3(1) of Customs Tariff Act , 1975 CVD (CE)
(iii) Additional Duty Section 3(5) of Customs Tariff Act , 1975 CVD (VAT) 4%
(iv) Omitted --- ---
(v) Duty of Excise First Schedule of Central Excise Tariff Act, 1985 BED
(vi) Duty of Excise Second Schedule of Central Excise Tariff Act, 1985 SED
(vii) National Calamity Contingent Duty Section 136 of Finance Act 2001 NCCD

11. Explanation 2 : Eligible Duties and Taxes [For sub-section (1) and (5)]
(in respect of inputs and input services received on or after appointed day)
Sr. Type of Duty Leviable Under Remarks
(i) Additional Duty of Excise
Section 3 of Additional Duties of Excise (Goods of Special
Importance Act) 1957
AED (GSI)
(ii) Additional Duty Section 3(1) of Customs Tariff Act , 1975 CVD (CE)
(iii) Additional Duty Section 3(5) of Customs Tariff Act , 1975 CVD (VAT) 4%
(iv) Omitted --- ---
(v) Duty of Excise First Schedule of Central Excise Tariff Act, 1985 BED
(vi) Duty of Excise Second Schedule of Central Excise Tariff Act, 1985 SED
(vii) National Calamity Contingent Duty Section 136 of Finance Act 2001 NCCD
(viii
)
Service Tax Section 66B of the Finance Act 1994 ST

12. Explanation 3: Exclusion of Cess
The expression “eligible duties and taxes” excludes any cess which has NOT
been specified in
(i) Explanation 1 or Explanation 2; and
(ii) any cess which is collected as additional duty of customs under sub-section
(1) of section 3 of the Customs Tariff Act, 1975.’.

13. Eligible Tax? Discrepancies Examples
(i) Irregular Credit availed by the taxpayers in respect of KrishiKalyanCess, Education Cess,
Higher Education Cess, Swachh Bharat Cess and Clean energy cess.
(ii) Credit availed by the taxpayers on Documents more than one year old.
(iii) ISD Credit pertaining to other unit.
(iv) Credit availed on RCM.
(v) Excess/double credit availed by the taxpayers.
(vi) Credit availed by the taxpayers without invoices.
(vii) Credit availed without showing closing balance in the Service Tax and Central Excise June
2017 Return.

14. Eligible Tax? Discrepancies Examples
Credit of duty paid on coal held in stock under section 140(3) of the CGST Act, amounting to ₹
3.07 crore
Clean Energy Cess of ₹ 2.56 crore on coal in Table 7(a) A of Tran 1 return
Cenvat credit of Education Cess, Secondary and Higher Education Cess, Krishi Kalyan Cess,
Swatch Bharat Cess and Clean Energy Cess were not eligible duties for transition
Claims under Section 140(3) of the Act require that the invoices or other prescribed documents
were issued not earlier than twelve months immediately preceding 1st July 2017
ECL credited from both Tran 1 and Tran 2 or credit afforded in ECL without filing Tran 2; credit
claimed on stocks not declared or more than that declared in Tran 1
Credit on invoices not accounted for within the prescribed time limit; transitioning ineligible
or excess credit; and irregular credit claimed on capital goods.

15. Carry forward of CENVAT Credit – Sec 140(1)
Registered taxable person other than composition dealer
Allowed carry forward of Input tax/ CENVAT credit – through a return
Such credit must be eligible under GST law
He should have furnished all the returns required under the existing law for the period of six
months immediately preceding the appointed day
Credit should not relate to goods manufactured and cleared under such exemption
notifications as are notified by the Government
Credit can be taken in the electronic credit ledger (CGST)
Excess credit taken will be recovered as arrears of tax under GST law

16. Unavailed CENVAT Credit on Capital goods –Sec
140(2)
A registered taxable person, other than composition dealer, shall be
eligible to take the credit
In the electronic credit ledger
Unavailed Credit on Capital Goods (as per Rule 2(a) CENVAT Credit
Rule, 2004) not carried forward in a return
Unavailed Credit = (Total eligible credit – credit availed) under the
earlier law
Such credits must be eligible under the existing law AND under GST
law

17. Credit of eligible duties and taxes on input held in stock – Sec
140(3)
Person eligible for input tax
credit
• Person not liable to be
registered under the
existing law ;
• Person engaged in
manufacture / sale of
exempted goods,
provision of exempted
services;
• Person providing works
contract service and
availing abatement under
notification no. 26/2012;
• First / Second stage
dealer, importer, or depot
of a manufacturer.
Credit available on
• Inputs held in stock
and inputs
contained in semi-
finished goods or
finished goods held
in stock as on
appointed day
 Above
benefit not
available
for input
services
• Such credit can be
taken in the
electronic credit
ledger
Conditions
• Goods must be used or intended to be used for
taxable supplies
• Reg person eligible to take the credit under GST law
• Such person should be in possession of invoice or
other prescribed document evidencing payment of
duty under the existing law in respect of such inputs
• Invoice or other document should be within 12
months from the appointed day S. 140(3)(iv)
• the supplier of services is not eligible for any
abatement under this Act
• Excess claims will be recovered as arrears of tax
under GST law

18. Section 140(3)(iv)- FILCO Trade Centre P Ltd case
Invoice or other document should be within 12 months from the appointed day S. 140(3)(iv)
Filco Trade HC Order
• Section140(3)(iv) set aside as unconstitutional
• Appeal filed by Dept
SC Order silent on the issue; SC only gave directions to GSTN to open the portal for two months
enabling all aggrieved registered persons to file TRAN 1/2 as a last opportunity
Issue remains open; Course of Action?

19. Credit of eligible duties and taxes on input held in stock - no
documentary evidence– Sec 140(3)
Person eligible for input tax
credit
•a registered person,
other than a
manufacturer or a
supplier of services(
e.g Trader).
•not in possession of
an invoice or any
other documents
evidencing payment
of duty in respect of
inputs
Credit available on
• Inputs held in stock
and inputs
contained in semi-
finished goods or
finished goods held
in stock as on
appointed day
 Above
benefit not
available for
input
services
• Such credit can be
taken in the
electronic credit
ledger
Amount of Credit that can be availed
• 60% of the CGST paid if Rate under CGST is 9% or more
• 30% of the IGST paid if Rate under IGST is 18% or more
• 40% of CGST paid if in rate under CGST is less than 9%
• 20% of IGST paid if in rate under IGST is less than 18%
(Ref Rule 117(4) of CGST Rules, 2017)
• Similar provisions have been notified under SGST Act(s)
for the credit of VAT to be allowed to trader in case of
MRP based valuation where tax is paid at first point only.
• Statement in Form GST TRAN 2 to be submitted at end of
each of 6 tax periods during which such scheme is in
operation.

20. Credit of duties on inputs held in stock on switching over from
composition scheme - Sec 140 (6)
Person eligible for
input tax credit
•A registered
person who was
paying tax under
composition
scheme.
Credit available on
• Inputs held in stock and inputs
contained in semi-finished
goods or finished goods held in
stock as on appointed day
 Above benefit not
available for input
services
• Such credit can be taken in the
electronic credit ledger
Conditions
• Person not paying taxes under composition
scheme under GST law
• Goods must be used for taxable supply
• Otherwise eligible to take the credit under
GST law
• Such person should be in possession of
invoice / other prescribed document
• Invoices / other prescribed document was
not issued earlier than 12 months preceding
appointed day
 Rule 117 of CGST Rules, 2017- FORM TRAN-1 to be filed specifying eligible ITC amount.
 Scheme available upto 6 tax periods

21. Credit distribution of service tax by ISD (CGST) – Sec 140(7)
Input service
distributor shall be
eligible for distribution
of credit
Services are received
prior to 1st July 2017
Invoices for such
services are received
on or after 1st July
2017

22. Credit distribution of service tax by ISD (CGST) – Sec 140(7)
SGST

23. Nuvoco Vistas Corporation Ltd- WP No. 437/2020; BHC Order
dated 17.11.2022
Department Stand
• 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 can neither be transitioned directly into
the Electronic Credit Ledger (ECL) maintained under the GST regime
• Petitioner has erred in comparing the erstwhile ISD with the normal
Service Tax assessed in light of Section 140

24. Nuvoco Vistas Corporation Ltd- WP No. 437/2020; BHC Order
dated 17.11.2022
BHC Order
• The GST TRAN-1/revised GST TRAN-1 filed by the units/offices
will be basis the manual ISD invoices issued/to be issued by ISD
of petitioner subject to aggregate credit cumulatively not
exceeding the ISD credit available with petitioner of
Rs.13,43,92,019/-
Department Stand
• Appeal being filed before SC

25. Credit distribution of service tax by ISD (CGST) – Sec 140(7)
ISD can only distribute credit through Returns in the older regime
ISD cannot transition the tax to GST
ISD not allowed to migrated in GST; Identity finished; No functionality needed; No role of GSTN; No technical
glitches sort of; BHC relying on FILCO case simply allowed the appeals; Whether an ISD be allowed to transition the
tax to GST is a question of law pending in Supreme Court;
Various cases pending in High Court; Appeals filed in SC
Issue still pending; Question of law to be decided by SC

26. Transfer of unutilised CENVAT credit by a person having
centralised registration – Sec 140(8)
Taxable person has
centralised registration
under existing law
Obtained registration
under GST Act
Allowed to take credit
of CENVAT c/f in return
furnished under
existing law in
electronic credit ledger
For the period ending with the day immediately preceding the appointed day
 If the taxable person files an original / revised return within 3 months of the appointed day
 Credit will be allowed if credit amount is reduced from that claimed earlier
Note:
1. Only those credits which are admissible under GST laws will be allowed
2. Credit may be transferred to any registered person having the same PAN for which centralised
registration was obtained under earlier law
3. Application in Form TRAN-1 within 90 days from appointed date

27. Taxability of supply of goods and
services in certain cases – Sec
142(11)
Goods -
No tax payable under CGST Act, to
the extent tax leviable under VAT Act
of the state
Services -
No tax payable under CGST Act, to
the extent tax leviable under Service
Tax Law
If tax paid under VAT and Service tax
law – Tax leviable under GST and
taxable person shall be allowed credit
of VAT and Service tax, in the manner
to be prescribed

28. Goods sent on approval basis returned on or after the
appointed day – Sec 142(12)
Tax not to be
payable when
• Goods sent on approval basis under existing law not earlier than six months from the appointed
day;
• Such goods are returned within six months or within the extended period from the appointed
date
Tax to be
payable when
and by whom
• Goods are liable for payment of taxes under GST; and
• Such goods are returned after six month or within the extended period from the appointed day
• Tax shall be payable by person returning the goods, if the goods are returned after a period of
six months or extended period of time from the appointed day
• Tax shall be payable by person who has sent goods on approval basis, if the goods are not
returned within the six months or extended period of time from the appointed day
Note – The details of goods sent on approval basis to be submitted in FORM GST TRAN 1 within 90 days of
appointed day

29. Circular No. 180/2022-GST
dated 09.09.2022
• Guidelines for filing/revising TRAN-1/TRAN-2 in
terms of order dated 22.07.2022 & 02.09.2022 of
Hon’ble Supreme Court in the case of Union of
India vs. Filco Trade Centre Pvt. Ltd
• Maharashtra Trade Circular No. 11T of 2022

30. Hon’ble Supreme Court in the case of Union of India vs.
Filco Trade Centre Pvt. Ltd
GSTN to open the portal for filing TRAN 1 /2
Any aggrieved registered assessee is directed to file the relevant form or revise the
already filed form irrespective of whether the taxpayer has filed writ petition before
the High Court or whether the case of the taxpayer has been decided by ITGRC.
The concerned officers are given 90 days thereafter to verify the veracity of the
claim/transitional credit and pass appropriate orders thereon on merits after granting
appropriate reasonable opportunity to the parties concerned.
It is clarified that all questions of law decided by the respective High Courts concerning
Section 140 of the CGST Act, 2017 read with the corresponding Rule/Notification or
direction are kept open. (Order dated 2nd September 2022)

31. Guidelines for filing/revising TRAN-1/TRAN-2 (1/4)
• File or revise TRAN 1 / 2
• Declaration in Annexure ‘A’
• Credit in table 7A (CTD documents) -Upload TRANS 3
• No claim for transitional credit shall be filed in table 5(b) & 5(c) of
FORM GST TRAN-1 in respect of such C-Forms, F-Forms and H/I-Forms
which have been issued after the due date prescribed for submitting
the declaration in FORM GST TRAN-1 i.e. after 27.12.2017

32. Guidelines for filing/revising TRAN-1/TRAN-2 (2/ 4 )
• Entire claim in one consolidated FORM GST TRAN-2, instead of filing the
claim tax-period-wise Rule 117(4) (b) (iii) of the CGST Rules, 2017.
• In such cases, in the column ‘Tax Period‘ in FORM GST TRAN-2, the
applicant shall mention the last month of the consolidated period for
which the claim is being made
• Download a copy of TRAN 1/2/3, if any and submit it to the jurisdiction
officer within seven days

33. Guidelines for filing/revising TRAN-1/TRAN-2 (3/4 )
• Keep all the requisite documents/records/returns/invoices, in support of
his claim of transitional credit, ready for making the same available to the
concerned tax officers for verification.
• NOT a dispute settlement mechanism; Rejection cases; Pending
adjudication / appeal cases … Pursue the litigation

34. Guidelines for filing/revising TRAN-1/TRAN-2 (4/4 )
• Verification by Jurisdictional officer
• Interaction / Report from Counterpart officer, if required
• May ask documents/ records/ invoices / returns from applicant
• Personal Hearing
• Appropriate Order
• ITC to get credited in the Electronic Credit Ledger

35. Guidelines for filing/revising TRAN-1/TRAN-2 – Annexure ‘A’
• Details of TRAN 1/ 2 filed earlier
• Details of notice and order, if any issued in this behalf
• Details of appeal u/s 107 or petition before HC, if any and orders therein, if any.
• Transitional credit claim made now.
• Act wise details of Notice or order, if any under existing law wrt credit claimed as
transitional credit.
• Declaration of taxpayer that he - Has furnished 6 months’ returns under existing
law ; Is in possession of all documents, evidences, invoices, accounts, statutory
declarations and other records; Has not claimed such credit in GSTR-3B. If
claimed, details thereof, details of its reversal, if any ; Refund of c/f credit is not
claimed/refunded as refund under existing law ; Has not utilized or adjusted any
amount of credit under the existing law

36. Herculean Task?
Officers, within ninety days, will be required to verify the veracity of the
claim/transitional credit and pass appropriate orders thereon on merits after
granting appropriate reasonable opportunity to the parties concerned.
• Physical copies to be submitted within 7 days of TRAN 1 / 2
• Verification by Jurisdiction officer
• Take comments from the counterpart officer
• Call for documents from the registered person for verification
• Give Notice…. Give PH
• Decide ……. Order
• Before 28.02.2022

37. Thank You