The Andhra Pradesh High Court has held that transitional credit shall not be denied for mere lapse in filing of TRAN-3 especially when the Supreme Court directed to reopen the portal for refiling.
The bench of Justice R. Raghunandan Rao and Justice Sumathi Jagadam observed that Para 4.7 of CBIC Circular No. 180/12/2022-GST applied when there was eligibility on merits. The procedural lapses cannot override substantive entitlements—a much-needed relief for taxpayers caught in the complexities of GST transition.
The petitioner, Mahavir Auto, which was earlier registered under the Andhra Pradesh VAT Act, had paid excise duty on its closing stock as of July 1, 2017 — the date of GST rollout. The company attempted to carry forward this credit to the new GST system by filing the mandated TRAN-1 form but failed to upload the supplementary TRAN-3 form due to technical issues.
In January 2020, the GST department issued a show-cause notice seeking reversal of the transitional credit. Mahavir Auto responded, citing technical glitches. Nevertheless, in February 2023, the department passed an order rejecting the claim and demanding repayment with interest and penalty.
Following the landmark Supreme Court judgment in Union of India vs. Filco Trade Centre Pvt. Ltd., the GSTN portal was reopened from September 1 to November 30, 2022, allowing taxpayers to refile TRAN forms. Mahavir Auto used this opportunity to file the TRAN-3 form on November 29, 2022.
However, the department again rejected the claim, citing CBIC Circular No. 180/12/2022-GST dated September 9, 2022, which barred fresh filings where adjudication was pending. This led the company to appeal before the Additional Commissioner and subsequently file writ petitions after the appeal was dismissed.
The High Court held that the authorities had wrongly applied Guideline 4.7 of the CBIC circular. The court clarified that the guideline applies only in cases where the eligibility of the credit itself is under dispute, not where the procedural aspect (like non-filing of a form) is in question.
“There is no dispute, even according to the impugned orders, that the credit sought to be transitioned by the petitioner was available under the Excise Act,” the court stated, concluding that denial on such procedural grounds was unjustified.
The court quashed both the Order and directed the authorities to permit Mahavir Auto to transition the eligible credit to the GST regime and nullified any tax demands raised due to the rejection of transitional credit.
Case Details
Case Title: M/S. Mahavir Auto Diagnostics Private Limited Versus Additional Commissioner Of Central Tax
Case No.: Writ Petition No: 14494/2024
Date: 23.07.2025
Counsel For Petitioner: Pasupuleti Venkata Prasad
Counsel For Respondent: P S P Suresh Kumar
