Transitional input tax credit cannot be lost through a narrow procedural reading when GST migration difficulties prevent timely TRAN-I filing.

Transitional input tax credit is treated as an accrued vested right and cannot be denied by an unduly narrow reading of procedural transition rules. The Court viewed Rule 117(1A) as too restrictive if confined to portal-side technical difficulty alone, since such a construction could operate arbitrarily and discriminatorily against taxpayers unable to migrate smoothly to GST. It also accepted that where the portal had not functioned effectively and extensions had been granted, taxpayers could be permitted to upload TRAN-I belatedly, with the department retaining power to verify the claim. The relief was extended to preserve accumulated credit rather than permit its forfeiture.

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Issues: (i) Whether Rule 117(1A) of the Haryana GST Rules, 2017 could be sustained insofar as it restricted filing of TRAN-I and the benefit of transitional credit to cases of technical difficulty on the common portal; (ii) Whether the petitioner was entitled to be permitted to upload TRAN-I and claim the accumulated transitional credit.

Issue (i): Whether Rule 117(1A) of the Haryana GST Rules, 2017 could be sustained insofar as it restricted filing of TRAN-I and the benefit of transitional credit to cases of technical difficulty on the common portal.

Analysis: The restriction created by sub-rule (1A) was treated as too narrow to deny transitional credit where taxpayers faced difficulty in migrating to the new GST system. The Court relied on the earlier view that the provision operated in an arbitrary and discriminatory manner when read as limiting relief only to portal-side glitches. It held that accrued transitional credit is a vested right and that denying it through a restrictive delegated rule, without a broader statutory basis, offends equality and property protections.

Conclusion: Rule 117(1A) was not declared invalid, but its narrow operation could not defeat the petitioner's right to transitional credit.

Issue (ii): Whether the petitioner was entitled to be permitted to upload TRAN-I and claim the accumulated transitional credit.

Analysis: The Court applied the earlier decisions permitting similarly placed taxpayers to file TRAN-I belatedly where the GST portal had not functioned effectively and where repeated extensions had already been granted by the authorities. It found that the petitioner's inability to upload the form should not result in forfeiture of unutilized credit and that the respondents retained liberty to verify the genuineness of the claim.

Conclusion: The petitioner was entitled to upload TRAN-I and, failing that, to avail the credit in GSTR-3B within the time directed by the Court.

Final Conclusion: The petition succeeded, transitional credit relief was granted, and the respondents were left free to verify the claim on merits.

Ratio Decidendi: Transitional input tax credit that has accrued as a vested right cannot be denied by an unduly restrictive construction of procedural transition rules or by delegated legislation that operates arbitrarily and discriminatorily.

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