2020 (3) TMI 728 - HC - GST

Court upholds Rule 117 in GST Tran-1 petitions, denies relief to petitioners.

M/s. Shree Motors, (Proprietor Pradeep Choudhary) Versus Union Of India, The Goods And Service Tax Council (GST Council), Goods And Service Tax Network (GSTN), Central Board Of Indirect or Taxes And Customs, Assistant Commissioner, Office Of Central Goods And Service Tax And Gaurav Industries Versus GST Council Secretariat, Commissioner, CGST Commissionerate, Assistant Commissioner, CGST Division-D, Range Pali

The court dismissed the petitions as the petitioners failed to prove technical glitches and attempts to file Form GST Tran-1 within the prescribed period. ... Filing of FORM TRAN-1 - denial of transactional credit of central excise paid on goods - Rule 117 of the Central Goods and Service Tax Rules, 2017 - HELD THAT:- In view of the fact that this Court while deciding the writ petitions filed by the petitioners had laid down the specific parameters for grant of relief to the petitioners and it has been found by the respondents as a fact that there was no evidences of error or submission/filing of Form GST Tran-1 by the petitioners, the petitioners apparently are bound by the said outcome and, as such, are not entitled to any relief. So far as the submissions made pertaining to the vested right and the fact that as the petitioners have admittedly paid the taxes and are, therefore, entitled for the relief, suffice it to notice that the petitioners had questioned the validity of provisions of Section 140 of the CGST Act and Rule 117 of the CGST Rules in the earlier writ petition, which plea was negated. No case for interference as sought by the petitioners is made out in the present writ petitions - Petition dismissed. Issues Involved:1. Non-filing of Form GST Tran-1 due to technical glitches.2. Validity of Rule 117 of the CGST Rules.3. Entitlement to transitional credit under Section 140 of the CGST Act.4. Requirement of proof of technical glitches and attempts to file Form GST Tran-1.5. Vested rights and limitation period for claiming credit.6. Rejection of petitioners' representations by GST Council.Issue-wise Detailed Analysis:1. Non-filing of Form GST Tran-1 due to technical glitches:The petitioners were aggrieved by their inability to file Form GST Tran-1 on the common portal due to various system errors/technical glitches. This resulted in the denial of transitional credit of central excise paid on goods amounting to Rs. 23,27,063/- and Rs. 85,41,755/- as on the appointed date, 01.07.2017, under Section 140 of the CGST Act. Despite several attempts and seeking help from the GST network portal, the petitioners could not file the form within the stipulated time.2. Validity of Rule 117 of the CGST Rules:The petitioners challenged the validity of Rule 117, which imposed a time limit for taking credit of eligible duties in the electronic credit ledger. However, the court had previously declared Rule 117 intra vires, and the issue of technical glitches was referred to a Single Judge for adjudication.3. Entitlement to transitional credit under Section 140 of the CGST Act:The petitioners argued that Section 140 of the CGST Act is a complete code in itself and does not provide for eligibility subject to any further conditions. They contended that they had a vested right to seek credit once the duties/taxes had been paid and that the denial of credit due to technical glitches was unjustified.4. Requirement of proof of technical glitches and attempts to file Form GST Tran-1:The court had directed the petitioners to submit proof that they had tried to upload Form GST Tran-1 prior to 27.12.2017 and that such attempts failed due to technical glitches. The petitioners were also required to obtain a certificate/recommendation from the GST Council. The GST Council, however, found no evidence of error or submission/filing of Form GST Tran-1 by the petitioners, categorizing their cases under 'B-1' where no technical glitches were recorded.5. Vested rights and limitation period for claiming credit:The petitioners argued that they had a vested right to claim credit and that the limitation period imposed by Rule 117 should not bar their entitlement, especially due to the department's failure to provide a functional system. The court, however, referred to the Supreme Court's judgment in Osram Surya (P) Ltd., which held that the statute had not taken away any vested rights but merely restricted the time within which the right had to be enforced. Thus, the plea regarding the denial of vested rights was not upheld.6. Rejection of petitioners' representations by GST Council:The GST Council rejected the petitioners' representations, stating that there was no evidence of technical glitches or attempts to file Form GST Tran-1. The court noted that the petitioners had not provided material evidence to support their claims of technical glitches during the transitional period. Consequently, the petitioners were bound by the outcome of the GST Council's findings and were not entitled to any relief.Conclusion:The court dismissed the petitions, stating that no case for interference was made out. The petitioners failed to provide sufficient proof of technical glitches and attempts to file Form GST Tran-1 within the prescribed period. The court upheld the validity of Rule 117 and the limitation period for claiming transitional credit, rejecting the petitioners' arguments on vested rights. The GST Council's findings, which showed no evidence of technical errors, were decisive in denying the relief sought by the petitioners. No order as to costs was made.