TaxTMI 
TaxTMI 
2022 (7) TMI 182
X X X X Extracts X X X X
X X X X Extracts X X X X
....r any other relief(s) as this Hon'ble Court deems fit and proper in the facts and circumstances of the case and in the interest of justice." 2. The facts as emerging from the record are summarized as under: 2.1 The writ applicant No.1 is a private limited company, incorporated under the provisions of the Companies Act, 1956 and the writ applicant No.2 is the Director of the said company. The writ applicant company is engaged in the business of manufacturing of cast articles of iron or steel falling under Central Excise Tariff sub heading No.73259910. 2.2 It is the case of the writ applicant that under the erstwhile regime, the writ applicant company was a registered dealer and had availed Input Tax Credit of the accumulated CENVAT credit as of 30.06.2017. The writ applicant No.1 claims to have filed ER-1 returns i.e. return of excisable goods and the availment of CENVAT credit was in accordance with the provisions of the prevailing statute. Pursuant to the introduction of the Central Goods and Service Tax Act, 2017 (herein after referred to as 'the Act, 2017') with effect from 01.07.2017, the writ applicant company got itself registered as a "registered dealer" under the A....
X X X X Extracts X X X X
X X X X Extracts X X X X
....he specified time limit more particularly, contending and by relying upon Section 140 of the Act read with Rule 117 of the CGST Rules that the tax payer cannot claim the credit accumulated under the erstwhile taxation regime as a vested right for transition under the GST Act, is without any basis. This Court on number of occasions has come across similar controversy wherein in past, the respondent authorities have refused to extend the availment of the Input Tax Credit on account of delayed filing of Form TRAN - 1. So far as the contention of the respondent authorities as regard vested right is concerned, the same is subject to certain conditions safeguards and limitations as provided and prescribed under the statutes and the rules framed thereunder. However, at the same time, this Court as well as the other High Courts on number of occasions have considered the aforesaid aspect and have ultimately, held that the credit standing in favour of an assessee is "property" and the assessee cannot be deprived of such property saved by authority of law in terms of Article 300(A) of the Constitution of India. 5. So far as core issue with regard to delay in filing Form TRAN-1 is concerned....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ST Rules'). Rule 117 of the said rules imposed a time limit of 90 days for availing benefit of the accumulated CENVAT credit as provided under Section 140 (1) in its input tax credit register under the CGST Act. The said Rule reads as under: "117. Tax or duty credit carried forward under any existing law or on goods held in stock on the appointed day.- (1) Every registered person entitled to take credit of input tax under section 140 shall, within ninety days of the appointed day, submit a declaration electronically in FORM GST TRAN-1, duly signed, on the common portal specifying therein, separately, the amount of input tax credit of eligible duties and taxes, as defined in Explanation 2 to section 140, to which he is entitled under the provisions of the said section: Provided that the Commissioner may, on the recommendations of the Council, extend the period of ninety days by a further period not exceeding ninety days. Provided further that where the inputs have been received from an Export Oriented Unit or a unit located in Electronic Hardware Technology Park, the credit shall be allowed to the extent as provided in sub-rule (7) of rule 3 of the CENVAT Credit Ru....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... was on account of several factors - predominantly being inadequacies in the network of the respondents, which failed to meet the expectations and serve the needs of taxpayers. Thousands of taxpayers complained that there was low bandwidth and despite several attempts being made on the GST Network, they were unsuccessful in filing the statutory GST TRAN-1 Form online. Scores of complaints were made on the portal and it was also brought to the notice of the government. The technical difficulties faced by the taxpayer were acknowledged and an IT Grievance Redressal Committee was constituted and assigned the task of redressing the grievance of the taxpayers. The recommendations of the Grievance Redressal Committee were also brought to the notice of the GST Council and the matter was deliberated upon. Several cases got settled at the government level, however some cases were contested on the ground that taxpayers did not put forward any evidence to suggest that they faced any technical glitch on the portal that prevented them to submit the GST TRAN-1 Form within the prescribed time limit. Many such matters travelled to courts. Majority of them were allowed in favour of the taxpayers, a....
X X X X Extracts X X X X
X X X X Extracts X X X X
....hat the period for filing the TRAN-1 is not considered - either by the legislature, or the executive as sacrosanct or mandatory. 15. In the above factual background, in some of the cases that came up before this Court, the petitioners cited difficulties in filing the TRAN-1 Form which were of a different nature. In some cases, there were bonafide errors on the part of the taxpayer and in others, the difficulty arose on account of lack of understanding of the complete overhaul of the indirect tax system; or complicated filing procedure and the statutory forms resulting in erroneous information being stated therein. Even in such cases, to note a few, this Court has declined to make a differentiation and given the benefit of the doubt to the taxpayers, realizing that Respondent's network and system, and the change, had posed multifarious problems that require a reasonable approach. One such petition has been preferred by the Sales Tax Bar Association [W.P (c) No. 9575/2017] narrating scores of technical problems being faced on the portal. We adopted a proactive approach in the said matter and have endeavoured to identify root cause for failure of the network to work seamlessl....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ired and vested on the appointed date as it was reflected in the said CENVAT credit register in the previous regime. On enactment of the CGST Act, no mechanism was provided for the refund of the credit that existed on the said date. The only mechanism was for utilization of such credit by migrating the same to the GST regime by way of filing declaration-Form TRAN-1. The manner and procedure to carry forward the said CENVAT credit under Sub-Section (1) of Section 140 was to be 'prescribed'. The word 'prescribed' has also been defined under Section 2(87) to mean "prescribed by Rules made under this act on the recommendation of the council". This brings us to Rule 117 of CGST Rules, the relevant provision prescribing the manner in which the CENVAT credit has to be transitioned. Initially, the time limit prescribed under Rule 117 for transitioning was 90 days, as explained above, was extended from time to time. Evidently, there is no other provision in the Act prescribing time limit for the transition of the CENVAT credit, and the same has been introduced only by way of Rule 117. This provision also contains a proviso, which vests power with the Commissioner to extend the period on the....
X X X X Extracts X X X X
X X X X Extracts X X X X
....sed by low bandwidth and lack of computer knowledge and skill to operate the system. It is very unfair on the part of the respondents, in these circumstances, to expect that the taxpayers should have been fully geared to deal with the new system on day-one, when they themselves were completely ill-prepared, which led to creation of a complete mess. The respondents cannot adopt different standards - one for themselves, and another for the taxpayers. The GST regime heralded the system of seamless input tax credits. The successful migration to the new system was a formidable and unprecedented task. The fractures in the system, after its launch, became visible as taxpayers started logging in closer to the deadline. They encountered trouble filing the returns. Petitioners who are large and mega corporations - despite the aid of experts in the field, could not collate the humongous data required for submission of the statutory forms. Courts cannot be oblivious to the fact that a large population of this country does not have access to the Internet and the filing of TRAN-1 was entirely shifted to electronic means. The Nodal Officers often reach to the conclusion that there is no technical....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ing the conduct of the taxpayers, and its own conduct, acts and omissions. The extremely narrow interpretation that the respondents seek to advance, of the concept of "technical difficulties", in order to avail the benefit of Sub Rule (1A), is contrary to the statutory mechanism built in the transitory provisions of the CGST Act. The legislature has recognized such existing rights and has protected the same by allowing migration thereof in the new regime under the aforesaid provision. In order to avail the benefit, no restriction has been put under any provisions of the Act in terms of the time period for transition. The time limit prescribed for availing the input tax credit with respect to the purchase of goods and services made in the pre-GST regime, cannot be discriminatory and unreasonable. There has to be a rationale forthcoming and, in absence thereof, it would be violative of Article 14 of the Constitution. Further, we are also of the view that the CENVAT credit which stood accrued and vested is the property of the assessee, and is a constitutional right under Article 300A of the Constitution. The same cannot be taken away merely by way of delegated legislation by framing r....
X X X X Extracts X X X X
X X X X Extracts X X X X
....id section. Those are the only limitations on the said statutory right. Under the garb of framing Rules - which are subordinate legislation, the width of those limitations could not have been expanded as is sought to be done by introduction of Rule (1A). In absence of any consequence being provided under Section 140, to the delayed filing of TRAN-1 Form, Rule 117 has to be read and understood as directory and not mandatory. Further, even in ALD Automotive Pvt. Ltd. v Commercial Tax Officer(2019) 13 SCC 225, while dealing with the question of whether the provision prescribing time limit for claim of Input Tax Credit is directory or mandatory in nature, it was observed that "whether particular provision is mandatory or directory has to be determined on the basis of object of particular provision and design of the statute" and "such interpretation should not be put which may promote the public mischief and cause public inconvenience and defeat the main object of the statute". Therefore, in the present cases, the purport of the transitory provisions is to allow a smooth migration from the erstwhile service tax regime to the new GST regime and the interpretation must be in consonance wi....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ars should be the guiding principle and thus, a period of three years from the appointed date would be the maximum period for availing of such credit. 7. It appears that the aforesaid decision of the High Court of Delhi was challenged by the respondent authorities by filing SLP before the Supreme Court bearing No. SLP (C) No. 22386/2020, whereby the Supreme Court vide order dated 07.01.2021 was pleased to dismissed the aforesaid appeal on the ground of delay as well as on merits. 8. Even this Court had an occasion to deal with similar issue in the case of M/s Siddharth Enterprises through partner Mahesh Liladhar Tibdewal vs. The Nodal Officer, in a batch of writ applications being Special Civil Application No.5758 of 2019 and allied matters. This Court vide order dated 06.09.2019 has allowed the aforesaid batch of writ applications with a direction to the respondent authorities to permit the writ applicants filing of declaration Form GST TRAN-1 and GST TRAN - 2 to enable them to claim transitional credit of the eligible duties in respect of the inputs held in the stock as on the appointed date in terms of Section 140(3) of the Act. At the same time, this Court further held th....