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of <h1>Court upholds validity of Rule 117 under GST Act, deems time limit mandatory, denies manual filing request</h1> <h3>M/s. P.R. Mani Electronics Versus Union of India, The Goods and Service Tax Council, The Principal Chief Commissioner of GST & Central Excise, The Assistant Commissioner of GST & Central Excise</h3> M/s. P.R. Mani Electronics Versus Union of India, The Goods and Service Tax Council, The Principal Chief Commissioner of GST & Central Excise, The ... Issues Involved:1. Validity of Rule 117 of the Central Goods and Service Tax Rules, 2017 (CGST Rules).2. Whether Rule 117 is ultra vires Section 140 of the Central Goods and Services Tax Act, 2017 (CGST Act).3. Whether Rule 117 violates Articles 14 and 300A of the Constitution.4. Whether the time limit prescribed in Rule 117 is mandatory or directory.5. Entitlement to file Form GST TRAN-1 electronically or manually to claim transitional input tax credit (ITC).Detailed Analysis:1. Validity of Rule 117 of the CGST Rules:The petitioner challenged the validity of Rule 117 on the grounds that it is ultra vires Section 140 of the CGST Act and infringes Articles 14 and 300A of the Constitution. The court examined Section 140, which deals with Transitional ITC, and noted that it requires a registered person to submit a return within such time and in such manner as prescribed. Section 164 of the CGST Act empowers the Government to frame rules for implementing the Act's provisions, including prescribing time limits. The court concluded that Rule 117, which prescribes the time limit for submitting Form GST TRAN-1, is intra vires Section 140 of the CGST Act.2. Whether Rule 117 is ultra vires Section 140 of the CGST Act:The court observed that Section 140 stipulates that a registered person making a claim for input tax credit should furnish a return within such time and in such manner as may be prescribed. The rule-making power under Section 164 is broad and includes prescribing time limits. The Finance Act, 2020, retrospectively amended Section 140 to include the words 'within such time,' thereby expressly conferring the power to prescribe time limits. The court found that Rule 117 is intra vires Section 140 of the CGST Act.3. Whether Rule 117 violates Articles 14 and 300A of the Constitution:The petitioner argued that ITC is in the nature of property and that Rule 117, by prescribing a time limit, deprives the petitioner of its property in violation of Article 300A. The court referred to the Supreme Court's judgment in Jayam and Company v. Assistant Commissioner, which held that ITC is a concession and not a vested right. Therefore, ITC can only be availed of by satisfying prescribed conditions. The court concluded that ITC is a concession and not property, and Rule 117 does not violate Article 300A.4. Whether the time limit prescribed in Rule 117 is mandatory or directory:The petitioner contended that Rule 117 should be construed as a directory provision and not mandatory. The court examined various judgments, including the Supreme Court's decision in ALD Automotive, which held that time limits for availing ITC are mandatory. The court also noted that the use of the word 'shall' in Rule 117 indicates a mandatory requirement. The court concluded that the time limit prescribed in Rule 117 is mandatory and not directory.5. Entitlement to file Form GST TRAN-1 electronically or manually to claim transitional ITC:The petitioner claimed that they could not submit Form GST TRAN-1 electronically due to technical difficulties and submitted a hard copy to the Sales Tax Collection Inspector. The court held that Rule 117 requires the form to be filed electronically on the common portal, and submitting a hard copy does not satisfy this requirement. The court dismissed the petitioner's request to file Form GST TRAN-1 manually and claim transitional ITC.Conclusion:The court dismissed the writ petition, concluding that Rule 117 of the CGST Rules is intra vires Section 140 of the CGST Act, the time limit prescribed is mandatory, and ITC is a concession and not a vested right. The petitioner failed to make out a case for filing Form GST TRAN-1 manually to claim transitional ITC.
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