2021 (9) TMI 820 - HC - GST

Court upholds petitioner's right to claim transitional credit despite amendment.

Micromax Informatics Ltd. Versus Union Of India & Ors.

The Court upheld the petitioner's right to claim transitional credit of Rs. 6,04,47,033/- despite a retrospective amendment affecting Section 140 of the ... Benefit of transitional credit - time limit for taking the input tax credit - Validity of retrospective amendment dated 18.05.2020 by which the provision of Section 128 of the Finance Act, 2020 has been inserted with effect from 1st July, 2017 to Section 140 of the Central Goods and Service Tax Act, 2017 - HELD THAT:- The judgment of SKH Sheet Metals Components [2020 (6) TMI 385 - DELHI HIGH COURT[ covers the issue in hand. It was held in the case that Petitioner is permitted to revise TRAN-1 Form on or before 30.06.2020 and transition the entire ITC, subject to verification by the Respondents. In view of the observations made by this Court, the amendment does not affect the right of the petitioner to claim transitional credit and it would be unnecessary to deal with the Constitutional challenge to it. Further, the petitioner is at liberty to apply for the transitional credit of ₹ 6,04,47,033/- which shall be dealt with by the department and disposed of by the department in accordance with law. Petition disposed off. Issues:1. Challenge to retrospective amendment dated 18.05.2020 regarding Section 128 of the Finance Act, 2020 affecting Section 140 of the Central Goods and Service Tax Act, 2017.2. Benefit of transitional credit of Rs. 6,04,47,033/- sought by the petitioner.3. Interpretation of the nature of Rule 117 prescribing time limit for taking input tax credit.4. Application of previous judgments in SKH Sheet Metals Components case and Gillette India Ltd. case to the present matter.5. Constitutional challenge to the amendment and the right to claim transitional credit.Analysis:1. The petitioner challenged the retrospective amendment dated 18.05.2020, inserting Section 128 of the Finance Act, 2020, affecting Section 140 of the Central Goods and Service Tax Act, 2017. The petitioner sought the benefit of transitional credit amounting to Rs. 6,04,47,033/-. The Court noted a previous judgment where Rule 117, prescribing a time limit for taking input tax credit, was held to be directory in nature, allowing a maximum period of three years for availing such credit. The amendment was seen as negating this judgment, with a pending Special Leave Petition before the Supreme Court challenging the earlier decision.2. The issue was further analyzed in light of the SKH Sheet Metals Components case, where the Court emphasized that despite the retrospective amendment, the power to fix timelines remained with the Central Government. The Court highlighted the arbitrary exclusion of deserving cases due to technical difficulties and the absence of consequences for non-compliance with the timelines. The judgment in Gillette India Ltd. case was also referenced, emphasizing the revision of Trans-1 rather than fresh filing.3. After considering the arguments, the Court found that the judgment in the SKH Sheet Metals Components case covered the present issue. It was concluded that the amendment did not affect the petitioner's right to claim transitional credit. The Court decided not to address the constitutional challenge, allowing the petitioner to apply for the transitional credit, subject to the department's disposal in accordance with the law and pending orders from the Supreme Court in the related Special Leave Petition.4. Consequently, the Writ Petition was disposed of, affirming the petitioner's right to claim transitional credit and leaving the decision on the application to the department, subject to further orders from the Supreme Court.