Court grants relief to company on CENVAT credit issue under CGST Act

The court ruled in favor of the petitioners, a limited company, in a case concerning the entitlement to carry forward CENVAT credit under Section 140 of the CGST Act, 2017. The court acknowledged technical glitches prevented the timely filing of Form GST TRAN-1, leading to the petitioners being unable to claim the credit. The court directed the respondents to permit the petitioners to upload the form before 31st March 2020, in line with a previous order, to claim the CENVAT credit. The court emphasized that denying the credit would result in double taxation and was arbitrary.

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Issues Involved:
1. Entitlement to carry forward CENVAT credit under Section 140 of the CGST Act, 2017.
2. Technical glitches preventing the filing of Form GST TRAN-1.
3. Directions to be issued to the respondents to allow the filing of Form GST TRAN-1.

Detailed Analysis:

1. Entitlement to Carry Forward CENVAT Credit:
The petitioners, a limited company, had a closing carried forward CENVAT balance amounting to Rs. 1,59,55,594 as of 30th June 2017. With the introduction of the CGST Act, 2017, the petitioners were entitled to carry forward this CENVAT credit under Section 140 of the CGST Act, 2017. Rule 117 of the CGST Rules, 2017 required the petitioners to submit the declaration electronically in Form GST TRAN-1 within ninety days from the appointed day, i.e., 1st July 2017, subject to extensions granted by the Commissioner on the recommendations of the GST Council.

2. Technical Glitches Preventing the Filing of Form GST TRAN-1:
The petitioners attempted to upload Form GST TRAN-1 on several occasions, specifically on 14th November 2017, 20th December 2017, and 25th December 2017, but were unable to do so due to technical glitches on the online portal. Despite the extension of the filing deadline to 27th December 2017, the petitioners were prevented from uploading the form. Subsequently, complaints were lodged with the Nodal Officer, and a manual submission of Form GST TRAN-1 was made on 30th January 2019. However, the petitioners were not granted the credit of CENVAT under the CGST Act, 2017.

3. Directions to be Issued to the Respondents:
The petitioners contended that the inability to upload Form GST TRAN-1 was due to technical glitches and not due to any fault on their part. They relied on the decision of a Coordinate Bench in the case of M/s Siddharth Enterprises vs. The Nodal Officer, which directed the respondents to permit the uploading of the declaration in Form GST TRAN-1 to claim CENVAT credit. Additionally, the Central Board of Indirect Taxes and Customs, through Order No.01/2020-GST dated 7th February 2020, extended the period for submitting the declaration in Form GST TRAN-1 till 31st March 2020 for those who faced technical difficulties.

Judgment:
The court acknowledged that the petitioners were unable to upload Form GST TRAN-1 due to technical glitches and not due to any fault on their part. The court referred to the decision in Siddharth Enterprises, which held that the due date for filing Form GST TRAN-1 is procedural and should not be construed as a mandatory provision. The court also noted that denying the petitioners the right to carry forward CENVAT credit would lead to double taxation and is arbitrary and irrational.

The court directed the respondents to permit the petitioners to upload the declaration in Form GST TRAN-1 in accordance with the order dated 7th February 2020 issued by the Central Board of Indirect Taxes and Customs. The petitioners were allowed to upload Form GST TRAN-1 before 31st March 2020 to claim the credit of CENVAT under Section 140(3) of the CGST Act, 2017. The exercise was to be completed within two weeks from the date of receipt of the court's order.

Conclusion:
The petition was disposed of with the direction to the respondents to allow the petitioners to upload Form GST TRAN-1 and claim the CENVAT credit. The rule was made absolute to the extent of these directions, and direct service was permitted.

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