GST Credit Denial Invalid Without Online Revision Option: Bombay HC Rules in Favour of Taxpayer
In a major relief for GST transition cases, the Bombay High Court has ruled that GST credit denial cannot be justified solely because the taxpayer couldn’t file revised returns electronically. The judgment reinforces a core principle—substance over procedure—when technical systems fail.
This case involved Johnson Matthey Chemicals India Pvt. Ltd., a manufacturer that missed claiming ₹1.16 crore in transitional CENVAT credit due to non-inclusion of three bills of entry in its original TRAN-1 filed in August 2017.
Why the GST Credit Was Denied
The GST department rejected the revised claim for two reasons:
- The ER-1 return was manually revised, not electronically
- The one-year time limit under Rule 4 of the CENVAT Credit Rules, 2004 was allegedly breached
The petitioner submitted a revised TRAN-1 and manually corrected ER-1 return in November 2022, post the reopening of the GST portal following the Supreme Court’s Filco Trade Centre judgment.
Bombay HC’s Clear Stand: System Failure Can’t Defeat Substantive Credit
The Division Bench of Justice M.S. Sonak and Justice Jitendra Jain rejected the department’s stand.
Key observations:
- The excise portal was inoperative after 1 July 2017.
- Electronic revision of ER-1 was factually and legally impossible.
- Penalising taxpayers for non-existent procedures is unjust.
- The error was informed in Feb 2018, well within the one-year limit.
- Delay in correction was due to technical constraints, not negligence.
Quoting Aberdare Technologies Pvt. Ltd. v. CBIC and Jekson Vision Pvt. Ltd. v. UOI, the Court reaffirmed that procedural lapses cannot override substantive rights, especially when no revenue loss is caused.
Key Takeaways for Taxpayers
- Manual corrections are valid if online systems were unavailable.
- Substantive credit can’t be denied due to technical impossibility.
- Communicating errors in time strengthens your legal defence.
- Transitional credit claims should not be rejected mechanically.
Expert Insight:
“This ruling reinforces a taxpayer’s right to claim transitional credit even if the system fails. Authorities must adopt a pragmatic, not hyper-technical, approach when genuine errors occur.”
— Indirect Tax Consultant at Efiletax
Legal Reference & Timeline
| Particulars | Details |
|---|---|
| Case Name | Johnson Matthey Chemicals India Pvt. Ltd. v. UOI |
| Court | Bombay High Court |
| Bench | Justice M.S. Sonak & Justice Jitendra Jain |
| Claimed Credit | ₹1,16,29,351 |
| Key Issue | Non-electronic ER-1 revision post 1 July 2017 |
| Final Verdict | Credit allowed; manual filing accepted |
| Completion Timeline Given by Court | Within 8 weeks |
GST Credit Denial: What You Should Do
If your transitional credit was denied due to electronic filing issues:
- Check if you attempted to revise the return and communicated the error
- Gather proof (letters, system errors, screenshots, etc.)
- File a representation quoting this Bombay HC judgment
- Consider legal remedy if your case is similar
Internal Link
Want to understand how GST transitional credit works? Read our complete guide to TRAN-1 credit.
External Link
You can access the Filco Trade Supreme Court judgment here.
FAQ: Transitional GST Credit
Q1. Is it mandatory to revise ER-1 online for GST transition?
No, if the portal was inactive post-1 July 2017, manual revision is legally valid.
Q2. What if I missed invoices in TRAN-1?
You can claim them if the delay was due to technical issues and proper communication was made in time.
Q3. What’s the limitation period under Rule 4 of CENVAT Rules?
One year from the date of invoice. However, courts have accepted valid representations made within time.
Summary
GST credit can’t be denied for failing to revise ER-1 online if the portal was inactive, rules Bombay HC. Manual correction is valid where online filing was impossible.