2021 (11) TMI 818 - HC - GST

High Court Allows Revision of Form for Input Tax Credit, Emphasizes Procedural Compliance

Commissioner of GST and Central Excise, Assistant Commissioner of GST and Central Excise, Central Board of Excise and Customs, Principal Commissioner Versus M/s. Bharat Electronics Limited

The High Court directed the Revenue to allow the petitioner to revise Form TRAN-1 to claim Input Tax Credit (ITC) within 8 weeks. The court emphasized ... Permission to revise the Form TRAN- 1 resulting in deprivation of the Input Tax Credit - transitional arrangement for Input Tax Credit - Section 140 of the GST Act - HELD THAT:- There seems to be a consistent view that if there is substantial compliance, denial of benefit of Input Tax Credit which is a beneficial scheme and framed with the larger public interest of bringing down the cascading effect of multiple taxes ought not to be frustrated on the ground of technicalities. The order of the learned Single Judge is affirmed in directing the petitioner/ respondent to enable the respondent herein to file a revised Form TRAN-1, by opening of the portal and that such exercise is to be completed within a period of 8 weeks from the date of issue this order. Appeal disposed off. Issues Involved:1. Permissibility of revising Form TRAN-1 to claim Input Tax Credit (ITC).2. Compliance with procedural requirements under GST law.3. Applicability of the doctrine of substantial compliance.4. Impact of technical errors on the transition of ITC.Detailed Analysis:1. Permissibility of Revising Form TRAN-1 to Claim Input Tax Credit (ITC):The petitioner/respondent filed a Writ Petition in W.P.No.2937 of 2019, challenging the Revenue's refusal to allow the revision of Form TRAN-1, which resulted in the deprivation of ITC. The High Court directed the Revenue to enable the petitioner to file a revised Form TRAN-1 by opening the portal within 8 weeks. The Revenue appealed this order, arguing that the respondent had already made corrections to Form TRAN-1 once, as permitted by Rule 120A of the CGST Act, 2017, and further corrections were impermissible.2. Compliance with Procedural Requirements under GST Law:The respondent initially filed Form TRAN-1 within the prescribed time, declaring a balance credit of Rs. 14,97,28,201/-. However, due to a misunderstanding, they erroneously entered Rs. 80,98,936/- in Column 6 instead of the correct amount. The Revenue argued that this error was fatal to the respondent's claim for transitioning credit. The respondent contended that their mistake was bona fide and sought to correct it after realizing the error in February 2017.3. Applicability of the Doctrine of Substantial Compliance:The court referenced the doctrine of substantial compliance, emphasizing that minor procedural errors should not defeat the substantive rights of the taxpayer. The court cited the Supreme Court's decision in Commissioner of Customs vs. Dilipkumar and Co., which held that substantial compliance with statutory requirements should suffice to achieve the statute's intent. The court found that the respondent had substantially complied with the requirements by filing Form TRAN-1 within time and declaring the correct amount in Column 5(b).4. Impact of Technical Errors on the Transition of ITC:The court noted that undue emphasis on technicalities could frustrate the objective of extending the benefit of ITC transition under GST. The court referenced the decision of the High Court of Bombay in Heritage Lifestyles and Developers Private Limited vs. Union of India, which held that technical errors should not prevent the taxpayer from claiming ITC. The court also cited the decision of the High Court of Punjab and Haryana in Commissioner of Central Excise, Ludhiana vs. Ralson India Ltd., which emphasized that beneficial legislation should not be defeated by a strict interpretation of procedural rules.Conclusion:The court affirmed the order of the learned Single Judge, directing the Revenue to enable the respondent to file a revised Form TRAN-1 by opening the portal within 8 weeks. The court emphasized that the respondent had substantially complied with the statutory requirements and that the denial of ITC based on a clerical error would be unwarranted. The court also noted that the Revenue could examine the legality and correctness of the claim of credit transitioned to GST in accordance with the law. The writ appeal was disposed of, and the connected Civil Miscellaneous Petition was closed.