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Court Allows Challenge to Rule 117(1A) of GST Rules | Taxpayer Rights Upheld The court allowed the petitioner's challenge to the vires of Rule 117(1A) of Central GST Rules, 2017, permitting them to upload form TRAN-I for credit of ...
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Court Allows Challenge to Rule 117(1A) of GST Rules | Taxpayer Rights Upheld
The court allowed the petitioner's challenge to the vires of Rule 117(1A) of Central GST Rules, 2017, permitting them to upload form TRAN-I for credit of excess VAT due to technical glitches. While the court did not invalidate Rule 117(1A), it criticized its narrow interpretation and allowed the petitioner to carry forward CENVAT credit. The court emphasized fair treatment of taxpayers and directed the Respondents to permit TRAN-I upload by 30.06.2020, with the petitioner having the option to avail ITC in GSTR-3B of July 2020 if compliance was not met.
Issues: Challenge to vires of Rule 117(1A) of Central GST Rules, 2017 and seeking permission to upload form TRAN-I for credit of excess VAT due to technical glitches.
Analysis: 1. The petitioner, a partnership firm trading electronic items, registered under Central Goods and Services Tax Act, 2017, sought to claim credit of duties and VAT pre-GST by filing Form GST TRAN-1, but failed to do so by the deadline. The Commissioner extended the deadline to file TRAN-I till 31.03.2020 under Rule 117(1A).
2. The petitioner contended that the issue aligns with the judgment in Adfert Technologies Pvt. Ltd. vs. Union of India, upheld by the Delhi High Court in Brand Equity Treaties Ltd. vs. Union of India. The Delhi High Court directed the filing of TRAN-I by 30.06.2020 for similarly situated taxpayers.
3. The court noted that several petitions, including Adfert Technologies Pvt. Ltd., were allowed by the Division Bench, directing the opening of the portal for TRAN-I filing. The Delhi High Court permitted revision of TRAN-I till 30.06.2020, emphasizing fair treatment of taxpayers by the government.
4. The Delhi High Court criticized the narrow interpretation of "technical difficulties" under Rule 117(1A) as arbitrary and discriminatory, violating Article 14 of the Constitution. It emphasized that CENVAT credit is the property of the assessee under Article 300A and cannot be arbitrarily denied.
5. The court declined to declare Rule 117(1A) invalid but allowed the petitioner to carry forward CENVAT credit, stating that repeated extensions by the Respondents for filing TRAN-I due to technical glitches support the claim of denial being a violation of constitutional rights.
6. Relying on the judgments of Adfert Technologies Pvt. Ltd. and Brand Equity Treaties Ltd., the court allowed the petition, directing the Respondents to permit TRAN-I upload by 30.06.2020. The petitioner could avail ITC in GSTR-3B of July 2020 if the Respondent failed to comply, with verification rights retained by the Respondents.
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