2019 (11) TMI 282 - HC - GST

Court orders extension for filing of TRAN-1 forms, protecting CENVAT/ITC claims. Upholds fairness in GST transition.

Adfert Technologies Pvt. Ltd. Versus Union of India And Ors.

The Court directed the Respondents to allow the Petitioners to file or revise TRAN-1 forms by 30.11.2019, ensuring that legitimate claims of CENVAT/ITC ... Permission to carry forward of unutilized CENVAT credit of duty paid - transitional credit - carry forward denied on account of nonfiling or incorrect filing of prescribed statutory Form i.e. TRAN-1 by the stipulated last date i.e. 27.12.2017 - HELD THAT:- The Petitioners who were registered under Central Excise Act or VAT Act must be filing their returns and it is one of the requirements of Section 140 of CGST Act, 2017 to carry forward unutilized credit. The Respondent authorities were having complete record of already registered persons and at present they are free to verify fact and figures of any Petitioner thus inspite of being aware of complete facts and figures, the Respondent cannot deprive Petitioners from their valuable right of credit. The Respondents are directed to permit the Petitioners to file or revise where already filed incorrect TRAN-1 either electronically or manually statutory Form(s) TRAN-1 on or before 30th November 2019. The Respondents are at liberty to verify genuineness of claim of Petitioners but nobody shall be denied to carry forward legitimate claim of CENVAT / ITC on the ground of non-filing of TRAN-I by 27.12.2017. Petition allowed. Issues Involved:1. Non-filing or incorrect filing of TRAN-1 forms by the stipulated last date.2. Entitlement to carry forward unutilized CENVAT credit and Input Tax Credit (ITC).3. Procedural and technical grounds for denying credit.4. Violation of constitutional rights under Article 14 and Article 300A.5. Government's extension of deadlines and technical glitches.6. Judicial precedents and their applicability.Detailed Analysis:1. Non-filing or Incorrect Filing of TRAN-1 Forms by the Stipulated Last Date:The Petitioners sought directions to permit the carry forward of unutilized CENVAT credit and ITC, which could not be carried forward due to non-filing or incorrect filing of TRAN-1 forms by the last date, i.e., 27.12.2017. The Court noted that the Petitioners were registered under the erstwhile tax regimes and had unutilized credits that they intended to carry forward under the new GST regime. The Court identified two types of cases: those who did not file TRAN-1 by the due date and those who filed incorrectly and sought to revise it.2. Entitlement to Carry Forward Unutilized CENVAT Credit and ITC:The Court examined Section 140 of the CGST Act, 2017, which allows registered persons to carry forward unutilized credits. Rule 117 of the CGST Rules, 2017, prescribed a 90-day period from the appointed day (extended to 27.12.2017) for filing TRAN-1. The Court emphasized that the unutilized credit is a vested right that cannot be denied on procedural or technical grounds. The Petitioners argued that denying this credit would result in double taxation, which is impermissible.3. Procedural and Technical Grounds for Denying Credit:The Court acknowledged the Petitioners' reasons for non-filing or incorrect filing, such as press releases showing different last dates, late availability of utilities to upload TRAN-1, heavy workload on accountants, lack of computer knowledge, and complexity in filling the form. It held that the unutilized credit is a vested right and cannot be taken away due to procedural lapses. The Respondent department's argument that the Petitioners had sufficient time and failed to utilize it was not accepted.4. Violation of Constitutional Rights under Article 14 and Article 300A:The Court referred to the Gujarat High Court's decision in Siddharth Enterprises vs. The Nodal Officer, which held that denying credit on procedural grounds violates Article 14 (equality before the law) and Article 300A (right to property) of the Constitution. It reiterated that unutilized credit is a vested right and property, and its denial without due process is unconstitutional.5. Government's Extension of Deadlines and Technical Glitches:The Court noted that Rule 117(1A) was introduced to extend the deadline for filing TRAN-1 due to technical glitches, allowing filing up to 31.12.2019. This indicated that the government did not intend to deny the carry forward of unutilized credit on the ground of time limits. The Court directed the Respondents to permit the Petitioners to file or revise TRAN-1 forms by 30.11.2019, either electronically or manually.6. Judicial Precedents and Their Applicability:The Court agreed with the findings of the Gujarat High Court in Siddharth Enterprises and the Delhi High Court in Krish Authomotors Pvt. Ltd., which allowed the filing of TRAN-1 forms even after the due date. It disagreed with the Gujarat High Court's earlier decision in Willowood Chemicals Pvt. Ltd., as it did not consider the introduction of Rule 117(1A). The Court emphasized that the denial of credit on procedural grounds is arbitrary and violates constitutional rights.Conclusion:The Court directed the Respondents to allow the Petitioners to file or revise TRAN-1 forms by 30.11.2019, ensuring that no one is denied the legitimate claim of CENVAT/ITC due to non-filing by the original deadline. The Respondents were permitted to verify the genuineness of the claims. The judgment underscored the importance of protecting vested rights and ensuring fairness in the transition to the GST regime.