2022 (2) TMI 996 - HC - GST

Unutilized CENVAT credit transition to GST despite TRAN-I/TRAN-II portal glitches, s.140 r.117 claim to be considered

Unutilized CENVAT credit standing under the erstwhile Central Excise Act, 1944 read with the CENVAT Rules, 2004 could not be denied merely because the ... Transition of input tax credit - transitional credit under Section 140 read with Rule 117 - substantial compliance - denial of input tax credit on technical grounds - beneficial scheme of input tax credit - remand for consideration of representationTransition of input tax credit - transitional credit under Section 140 read with Rule 117 - denial of input tax credit on technical grounds - substantial compliance - Respondent to consider and dispose of the petitioner's representation concerning failure to transition input tax credit due to technical glitches, and the legal proposition that transitional input tax credit should not be denied where there has been substantial compliance or successful transition. - HELD THAT: - The Court observed that the amount eligible for transition under the GST enactments by filing TRAN-I/TRAN-II ought to be allowed and that credit available under the earlier excise/CENVAT regime cannot be denied unless the law permits lapsing of such credit. The Court relied on the Division Bench's consistent view that denial of input tax credit, which is a beneficial scheme designed to avoid tax cascading, ought not to be frustrated by technicalities where there is substantial compliance; the Division Bench had directed enabling of the portal to permit filing/revision of TRAN-I. In the circumstances of the petitioners' representation dated 26.11.2019 (relating to attempted TRAN-I filing dated 30.08.2017 and earlier communications from the GSTN about resolution), the Court directed that the representation be considered and disposed of afresh within a specified time-frame, in light of the Division Bench observations and the principle that successful transition (or substantial compliance) should preserve the availability of input tax credit. [Paras 6, 7, 8, 9]Respondent to consider the petitioner's representation dated 26.11.2019 and dispose of it within three months from receipt of a copy of this order, having regard to the Division Bench's observations that transitional input tax credit should not be denied on technical grounds where there is substantial compliance.Final Conclusion: Writ petitions disposed by directing the respondents to consider and dispose of the petitioners' representation within three months in light of the Division Bench's view that transitional input tax credit should not be denied on technicalities; no costs. Issues:1. Transition of input tax credit due to technical glitches.2. Disposal of representation dated 26.11.2019.3. Scope for maintaining TRAN-I.4. Denial of credit under GST Act, 2017.5. Relief granted to dealers transitioning credit.6. Compliance with Input Tax Credit scheme.Analysis:1. The petitioner faced difficulties transitioning input tax credit on 28.08.2017 due to technical glitches on the website, preventing successful credit utilization.2. The petitioner submitted a representation dated 26.11.2019 regarding the TRAN-I return filed on 30.08.2017, which remained unresolved. The GST Network informed the petitioner that the issue was resolved, but the representation was not disposed of.3. The respondent argued that there is no scope for maintaining TRAN-I, asserting that the writ petition lacks merit.4. The Court emphasized that credit available under the Central Excise Act, 1944, along with CENVAT Rules, cannot be denied unless the law permits lapsing of such credit. Successful transition of credits under GST enactments allows for discharging tax liabilities.5. Referring to a previous case, relief was granted to dealers who transitioned credit under GST enactments, emphasizing the importance of substantial compliance and not frustrating the Input Tax Credit scheme due to technicalities.6. In light of the previous case, the Court directed the respondent to consider and dispose of the petitioner's representation dated 26.11.2019 within three months, following the observations of the Division Bench. The writ petitions were disposed of accordingly, with no costs incurred, and connected miscellaneous petitions were closed.