2019 (5) TMI 899 - HC - GST

Court addresses procedural glitches in GST Network impacting input tax credit claims under Section 140(3) of CGST Act.

Bhargava Motors Versus Union Of India & Ors.

The court addressed procedural glitches in the GST Network affecting an input tax credit claim by a trader and distributor under Section 140(3) of the ... Technical glitch in the GST portal - Uploading TRAN-1 form on the common portal within time limitation - transitional credit - transition to GST regime - Counsel for the Petitioner points out that as of present the portal does not permit a registered trader/dealer to save on his/her system the filled up TRAN-1 or TRAN-2 form. According to him it does not even permit a print out of a filled up form. This makes it difficult for the trader/registered dealer to know whether the form has been correctly filled up. The issue at present is technical glitch in the system which does not permit a rectification in a situation where a dealer may have, due to inadvertence, or a bonafide error, not correctly filled up a form or where the system, due to a limitation in the algorithm/software programme, does not accept the entries sought to be made by the dealer. HELD THAT:- The GST system is still in a ‘trial and error phase’ as far as its implementation is concerned. Ever since the date the GSTN became operational, this Court has been approached by dealers facing genuine difficulties in filing returns, claiming input tax credit through the GST portal - The Court’s attention has been drawn to a decision of the Madurai Bench of the Madras High Court in TARA EXPORTS VERSUS THE UNION OF INDIA, GOODS AND SERVICE TAX COUNCIL, THE PRINCIPAL COMMISSIONER OF CGST AND CENTRAL EXCISE, THE PRINCIPAL SECRETARY/COMMISSIONER OF COMMERCIAL TAXES, THE ASSISTANT COMMISSIONER (ST) , THE CENTRAL GST OFFICER AND THE ASSISTANT COMMISSIONER, CGST AND CENTRAL EXCISE [2018 (9) TMI 1474 - MADRAS HIGH COURT] where after acknowledging the procedural difficulties in claiming input tax credit in the TRAN-1 form that Court directed the Respondents “either to open the portal, so as to enable the petitioner to file the TRAN 1 electronically for claiming the transitional credit or accept the manually filed TRAN 1” and to allow the input credit claimed “after processing the same, if it is otherwise eligible in law”. In the present case also the Court is satisfied that the Petitioner’s difficulty in filling up a correct credit amount in the TRAN-1 form is a genuine one which should not preclude him from having his claim examined by the authorities in accordance with law - A direction is accordingly issued to the Respondents to either open the portal so as to enable the Petitioner to again file TRAN-1 electronically or to accept a manually filed TRAN-1 on or before 31st May 2019. The Petitioner’s claims will thereafter be processed in accordance with law. With a view to ensure that in future such glitches can be overcome, the Court directs the Respondents to consider providing in the software itself a facility of the trader/dealer being able to save onto his/her system the filled up form and also a facility for reviewing the form that has been filled up before its submission. It should also permit the dealer to print out the filled up form which will contain the date/time of its submission online. The Respondents will also consider whether there can be a message that pops up by way of an acknowledgment that the Form with the credit claimed has been correctly uploaded. Petition disposed off. Issues: Procedural glitch in GST Network affecting input tax credit claim.Analysis:1. The petitioner, a trader and distributor, sought input tax credit under Section 140(3) of the CGST Act for excise duty paid on goods in stock. The petitioner faced technical glitches while filing TRAN-1 form on the GST Network within the prescribed period, leading to the credit not reflecting in the electronic ledger despite successful filing confirmation.2. The court noted the petitioner's genuine claim for credit based on real transactions but highlighted the lack of a review provision before form submission, complicating the issue. The authorities were directed to disclose the petitioner's filled TRAN-1 form details and basis for rejecting the credit claim, emphasizing the need for a thorough examination.3. Affidavits filed by GSTN and Commissioner, Central Tax GST, Delhi revealed that the petitioner's claim documents were yet to be examined due to discrepancies in the filled TRAN-1 form. The court acknowledged the technical limitations hindering rectification of errors in the system, impacting dealers' ability to ensure accurate form submissions.4. While refraining from determining the entitlement to input tax credit, the court addressed the systemic challenges in the GST Network, emphasizing the ongoing trial and error phase in its implementation. Referring to a Madras High Court decision, the court directed the authorities to allow the petitioner to refile TRAN-1 electronically or manually, ensuring due processing of the claim.5. To prevent future glitches, the court directed the respondents to enhance the software by enabling traders to save, review, and print filled forms, along with providing acknowledgment upon correct form submission. The judgment concluded by disposing of the petition with the outlined directions to address the technical issues and ensure fair processing of input tax credit claims.