2019 (8) TMI 1080 - HC - GST

Dealer's Tax Credit Dispute Resolved: Court Directs Electronic Filing for GST

The Court addressed a case where a registered dealer faced challenges in claiming transitional credit under DVAT Act and input tax credit under GST due to ... Transitional credit under the DVAT/GST regime - input tax credit (ITC) - failure of electronic portal/technical glitches - manual filing of FORM TRAN-1 as alternate remedy - obligation to process valid claims despite portal unavailabilityFailure of electronic portal/technical glitches - transitional credit under the DVAT/GST regime - manual filing of FORM TRAN-1 as alternate remedy - Relief where a registered dealer, though eligible for transitional/input tax credit, could not submit Form TRAN-1 electronically due to technical portal failure. - HELD THAT: - The Court recorded that the Petitioner's entitlement to claim ITC was not disputed by the Respondents and that, for no fault of the Petitioner, the GST portal disallowed online submission of Form TRAN-1 after the stipulated date, rendering electronic filing impossible. The Court observed that the GST system was in a trial phase and that assessees should not be burdened for non-submission where server/network failures prevented connection. Having regard to these findings and the Petitioner's manual filing of TRAN-1 with the jurisdictional officer disclosing the claimed credits, the Court directed that the Respondents must either reopen the portal to enable electronic filing or accept the already filed manual TRAN-1, and thereafter process the claim in accordance with law. The Court also urged administrative review of the policy for such cases, recognising that failed electronic attempts may not be registered on the system and that alternate modes of filing must be accommodated to protect legitimate claims. [Paras 3, 4, 5, 6, 9]Respondents directed to reopen the Portal to permit electronic filing or, alternatively, accept the manually filed FORM TRAN-1 and thereafter process the Petitioner's claim in accordance with law.Final Conclusion: Writ petition disposed of by directing the Respondents to facilitate filing of FORM TRAN-1 either electronically (by reopening the Portal) or by accepting the manual TRAN-1 already filed, with the Petitioner's claim to be processed in accordance with law; administrative review of the policy for portal failures was urged. Issues:1. Claim of transitional credit under DVAT Act and input tax credit under GST.2. Technical glitches preventing online submission of Form TRAN-1 on GST Portal.3. Eligibility of the Petitioner to claim input tax credit.4. Manual filing of TRAN-1 form due to system errors.5. Review of GST system's trial and error phase.6. Compliance burden on Assessees due to network failures.7. Policy review by ITGRC for cases of technical glitches.Analysis:1. The judgment addresses a case where a registered dealer faced challenges in claiming transitional credit under DVAT Act and input tax credit under GST due to technical glitches. The Petitioner, represented by counsel, highlighted that despite eligibility to claim input tax credit, the system disallowed online submission of Form TRAN-1 on the GST Portal after a certain date, resulting in an outstanding credit claim of Rs. 65,03,389. The Petitioner resorted to manual filing of the form, disclosing the ITC amount and carry-forward tax credit, which was duly submitted to the jurisdictional officer.2. The Court acknowledged the presence of technical errors in the GST system, emphasizing its trial and error phase. It noted that the Petitioner's inability to connect with the server might not have been registered due to system failures. The Respondents did not dispute the Petitioner's eligibility for the claimed ITC amount. Citing previous orders, the Court highlighted the burden on Assessees to comply with the law amidst network failures, urging a review of the ITGRC's policy in such cases to address instances like the Petitioner's.3. Referring to precedents like Bhargava Motors v. Union of India and other cases, the Court emphasized the evolving nature of the GST system and the challenges faced by taxpayers. It stressed that expecting strict compliance in the face of network failures or system errors would be unreasonable. The Court directed the Respondents to either facilitate electronic filing of the TRAN-1 Form or accept the manually filed form, ensuring the Petitioner's claim is processed as per the law.4. In conclusion, the writ petition and application were disposed of with the directive for the Respondents to address the technical challenges faced by the Petitioner in claiming input tax credit, underscoring the need for a more accommodating approach towards taxpayers encountering system-related issues.