Filco Trade Centre: the transitional credit window, and what remains arguable after it closed

The Supreme Court reopened the portal for everyone once. Nine years into GST, transitional credit disputes are still being decided.

The problem the direction solved

The transition to GST asked taxpayers to migrate accumulated credit through TRAN-1 and TRAN-2 within ninety days, on a portal that was new, on a form that changed, in a period in which the law itself was being amended.

Thousands of taxpayers lost substantial credit for reasons that had nothing to do with entitlement: a portal error, a field that would not accept a value, a filing that did not register, advice that the form did not apply.

High Courts divided. Some directed acceptance of manual claims. Some held the time limit mandatory. A large body of appeals accumulated before the Supreme Court.

What the Supreme Court directed

The Court exercised its jurisdiction under Article 142 and directed the portal be opened for two months for all aggrieved registered persons, expressly extending the benefit beyond those who had approached the courts.

It directed that officers verify the claims within ninety days and pass orders on merits after affording a reasonable opportunity, and that allowed credit be reflected in the electronic credit ledger.

The Court also clarified that a taxpayer who had already succeeded before a High Court and obtained credit was not required to reagitate, and that the direction did not disturb concluded proceedings.

The window was later confirmed and administered through GSTN advisories and departmental instructions on verification.

The disputes that are live in 2026

First, the verification orders themselves. A very large number of claims filed in the Filco window were rejected on grounds that were never adjudicated with reasons — a credit head not eligible, a document not produced, a reconciliation not accepted. Those orders are appealable and many do not survive scrutiny of Section 75(4) and Section 75(6).

Second, credit that no form could carry. Credit relatable to a supply where the invoice was received after the appointed day, credit under Section 140(5), and credit of cesses which the courts have generally held not transitionable.

Third, the department's use of the closed window as a substantive answer. An order that says the taxpayer had an opportunity in 2022 and therefore the credit is lost does not deal with a claim of entitlement, and it does not deal with a claim that the portal did not accept the filing during the window itself.

Fourth, recovery. Where transitional credit was availed and then utilised, demands now carry interest under Section 50(3) and penalty. The availed versus utilised distinction is worth arguing on the interest limb.

What the courts have settled and what they have not

Settled: education cess, secondary and higher education cess and Krishi Kalyan cess are not transitionable as credit under the GST regime, following the line taken in the Cellular Operators Association and subsequent decisions.

Settled in substance: a time limit for transition is not per se unconstitutional. The relief the courts have given has been procedural and equitable rather than a declaration that transition has no deadline.

Open: the treatment of credit reflected in returns but not carried through the form on account of a portal failure, where the failure is documented by a screenshot or a grievance ticket contemporaneous with the attempt.

Open: whether a rejection order passed in the Filco verification exercise without a hearing can be sustained. On the current state of authority it usually cannot.

Authorities relied on

What to do on Monday

1. List every transitional claim and its verification outcome. Where the outcome is a rejection, check whether a hearing was given and whether reasons were recorded.

2. Retrieve the contemporaneous portal grievance tickets or screenshots from 2017 and 2022; a documented technical failure remains the strongest equitable ground.

3. For utilised transitional credit under demand, compute interest separately on availed and on utilised amounts under Rule 88B before agreeing to any figure.

4. Do not utilise a transitional credit that is still under verification; the interest and penalty consequence exceeds the cash flow benefit.

Questions we are asked on this

Can we still file a TRAN-1 today?

No. The window directed by the Supreme Court closed on 30 November 2022. What remains is a challenge to an order rejecting a claim already filed, or a claim to credit outside the transitional forms altogether.

Our Filco claim was rejected without a hearing. What is the remedy?

An appeal under Section 107 against the verification order, and where limitation is a difficulty, a writ petition on the denial of hearing. The Supreme Court's direction expressly required a reasonable opportunity.

Is interest payable on transitional credit that was availed but never used?

The availed versus utilised distinction under Section 50(3) read with Rule 88B is a live argument, and the department frequently ignores it. Compute both figures before you concede.

Does Filco help a taxpayer who never attempted to file?

It did, during the window, because the direction covered all aggrieved persons irrespective of litigation. After the window it does not, absent a documented inability to file within it.

Can transitional credit be adjusted against a current demand?

Only once it stands allowed and credited to the electronic credit ledger. A claim under verification is not a credit in the ledger, and utilising it invites a Section 73 or 74 demand.

In this cluster

• Input tax credit under GST: the complete 2026 position
• Section 16(2)(c): can your ITC be denied because the supplier did not pay tax?
• Section 16(4) time limit for claiming ITC: what survives after the amnesty
• GSTR-2A and 2B mismatch notices: how to answer without conceding
• Blocked credits under Section 17(5): the clause by clause map
• Safari Retreats: what the Supreme Court decided on ITC for construction, and what Parliament then undid
• ITC on canteen, transport, insurance and other employee benefits
• ITC reversal under Rules 42 and 43: working the formula correctly
• Rule 37: ITC reversal when you do not pay your supplier within 180 days
• Rule 37A: reversal where your supplier did not file its GSTR-3B

GST Insights is published by AMLEGALS for general information. Law stated as on 3 September 2026. Not advice on any particular set of facts; not an advertisement or a solicitation under Rule 36 of the Bar Council of India Rules. Readers with a question on their own facts may write to the GST practice of their own accord.