2022 (4) TMI 1025 - HC - GST

Manufacturer Granted Transitional Credit Under CGST Rules After Missing Deadline Due to Factory Fire Accident

The HC allowed a writ petition from a manufacturer seeking transitional credit under CGST Rules. The petitioner missed the TRAN-1 filing deadline due to ... Request for enabling of filing of GST TRAN-1 - Input tax credit - it is alleged that neither there is attempt to file Tran-1 return nor there are any technical glitches at the time of filing TRAN-1 return at GSTN common portal - HELD THAT:- Since the input tax credit equivalent to cash meant for being used for discharging the tax liability, transition of the input tax credit cannot be restricted or denied merely because there were technical difficulties. In case, the respondents are unable to permit the petitioner to file TRAN-1 belatedly, they have to credit the corresponding amount in the electronic cash register of the petitioner, provided such credit remained unutilized on the cut-off date. This Writ Petition is disposed off, by directing the respondents to verify whether indeed the petitioner had any input tax credit on the date of the accident i.e., 01.12.2016. The monthly returns, which would have been filed for the months of October and November 2016 would show the quantum of unutilized input tax credit on input service tax and capital goods credit. Petition disposed off. Issues:Challenge to impugned communication dated 19.11.2020 regarding TRAN-1 credit eligibility under CGST Rules, 2017.Analysis:The petitioner, engaged in manufacturing explosives, faced a fire accident in 2016 leading to factory closure until 2018 when Central Excise Act was replaced by CGST Act, 2017. Required to file TRAN-1 under Rule 117 of CGST Rules, 2017, petitioner missed the deadline due to factory closure. Despite amendments allowing relief for technical issues post-data entry, petitioner's request was rejected by respondents.The petitioner cited precedents like P.Preetha case and others, supporting their claim for transitional credit. Respondents contended that relief under Rule 117(1A) is for timely filers only, not for late filers like the petitioner. They argued against enabling provisions for transitional credit in 2020, seeking dismissal of the Writ Petition.Referring to the Delhi HC decision in M/s.Brand Equity Treaties case, respondents argued against extending the limitation period for claiming input tax credit in TRAN-1. Despite the Delhi HC ruling, the Department's appeal to the Supreme Court was mentioned as a barrier to allowing petitioner's credit claim.The judge, considering arguments and precedents, noted that previous cases granted benefits to assesses and allowed writ petitions. Emphasizing that input tax credit is crucial for tax liability discharge, the judge ruled in favor of the petitioner. Directing respondents to verify petitioner's unutilized credit on the accident date, the judge ordered credit entry in the electronic cash register or cash refund if credit remained unutilized.Conclusively, the Writ Petition was disposed of with the direction to verify and grant unutilized credit to the petitioner. No costs were awarded, and the connected Miscellaneous Petition was closed.