2020 (11) TMI 235 - HC - GST

GST input tax credit denial overturned despite missing TRAN-1 deadline when extension was granted

Heritage Lifestyles and Developers and Private Limited Versus The Union of India through the Revenue Secretary Ministry of Finance Department of Revenue Central Board of Indirect Taxes and Customs Ministry of Finance, State of Maharashtra, Through the Secretary Ministry of Finance, Department of Revenue, Goods and Service Tax Council, Deputy Commissioner of CGST & Central Excise Division-I, Range – III Navi Mumbai, Superintendent (Computers) CGST & Central Excise Navi Mumbai Superintendent of CGST & Central Excise, Range-III Division-I, Navi Mumbai, Deputy Commissioner of GST & Central Excise, Mumbai Commissioner of CGST & Central Excise, Chief Commissioner of GST & Central Excise, Mumbai

Heritage Lifestyles and Developers and Private Limited Versus The Union of India through the Revenue Secretary Ministry of Finance Department of Revenue ... Issues Involved:1. Inaction by Respondent authorities in granting Input Tax Credit (ITC) to the Petitioner.2. Challenge to the vires of Rule 117 and Rule 118 of the Central Goods and Services Tax Rules, 2017.3. Request for directions to allow filing of TRAN-1 electronically or manually.4. Eligibility for ITC amounting to Rs. 78,62,466/-.Issue-wise Detailed Analysis:1. Inaction by Respondent Authorities in Granting Input Tax Credit (ITC):The Petitioner, a private limited company engaged in real estate, was registered under the Maharashtra Value Added Tax Act, 2002, and the Central Goods and Services Tax Act, 2017. The Petitioner sought to carry forward ITC amounting to Rs. 79,44,237.61/- as per Section 140 of the CGST Act read with Rule 117 of the CGST Rules. Despite filing the necessary forms and providing required documentation, the Petitioner faced technical difficulties in filing TRAN-1 electronically by the stipulated deadline of 27.12.2017. The Petitioner made several attempts to resolve the issue, including submitting a manual TRAN-1 form and corresponding with Respondents, but did not receive the ITC due. The Respondents acknowledged the eligibility for ITC but denied it on technical grounds, stating that the Petitioner had not attempted to save, submit, or file TRAN-1 electronically.2. Challenge to the Vires of Rule 117 and Rule 118 of the Central Goods and Services Tax Rules, 2017:The Petitioner challenged the vires of Rule 117 and Rule 118 of the CGST Rules, 2017, arguing that these rules were ultra vires Sections 140(1), 140(3), and Section 9 of the CGST Act, 2017, and various Articles of the Constitution of India. The Petitioner contended that these rules were beyond the legislative competence of Parliament under Article 269-A of the Constitution. However, the court did not find it necessary to examine this challenge in detail, as the primary issue was resolved on other grounds.3. Request for Directions to Allow Filing of TRAN-1 Electronically or Manually:The Petitioner requested the court to direct the Respondents to accept the TRAN-1 form either electronically or in physical form and to grant the due ITC. The Petitioner argued that despite technical glitches and lack of awareness, it had made genuine efforts to comply with the requirements. The court noted that the Respondents had verified the Petitioner’s eligibility for ITC and found the Petitioner eligible for Rs. 78,62,466/-, but denied the credit on the technicality that the Petitioner had not attempted to file TRAN-1 electronically. The court deemed this denial unfair and a travesty of justice, especially since the Petitioner had complied with the substantive requirements.4. Eligibility for ITC Amounting to Rs. 78,62,466/-:The court acknowledged that the Respondents had verified and confirmed the Petitioner’s eligibility for ITC amounting to Rs. 78,62,466/-. Despite this, the ITGRC denied the credit due to the Petitioner’s failure to save, submit, or file TRAN-1 electronically. The court found this denial to be a mere technicality and emphasized the importance of substantial justice over procedural technicalities. Citing the Supreme Court decision in Mangalore Chemicals and Fertilizers Ltd. Vs. Deputy Commissioner, the court highlighted that public authorities should not rely on technicalities to deny rightful claims.Conclusion:The court directed the Respondents to accept the TRAN-1 filed by the Petitioner and grant the due ITC of Rs. 78,62,466/- in the electronic credit ledger within two weeks. The court did not find it necessary to examine the challenge to the vires of Rules 117 and 118 of the CGST Rules, 2017, given the resolution of the primary issue. The Petition was allowed with no order as to costs, and the court instructed that the order be digitally signed and communicated to the parties.