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2020 (7) TMI 443 - HC - GSTValidity of Period of limitation for transitional credit - GST TRANS-1 - Validity of Rule 117 of the Central Goods and Service Tax Rules, 2017 - Vires of Section 140 of the Central Goods and Services Tax Act, 2017 - direction to file Form GST TRANS – 1 either electronically or manually to claim the transitional input tax credit - principal contention of the learned counsel for the Petitioner was that Rule 117 of the CGST Rules does not impose a mandatory obligation on registered persons, such as the Petitioner, to file Form GST TRAN-1 within the prescribed period - HELD THAT:- The statutory and constitutional challenge, in this case, is on the basis that Rule 117 of the CGST Rules is ultra vires Section 140 of the CGST Act and Article 14 and 300-A of the Constitution - Section 140 stipulates that a registered person making a claim for input tax credit should furnish a return, within such time, and in such manner as may be prescribed. The rule making power is contained in Section 164, which is couched in wide terms, and enables the Government to frame rules to give effect to the provisions of the Act and, in particular, to make rules for matters that are required to be prescribed by the CGST Act. Interestingly, the power to frame rules with retrospective effect is also conferred subject to the limitation that it should not pre-date the date of entry into force of the CGST Act. Pursuant thereto, Rule 117 was framed whereby a time limit was fixed for submitting the on line Form GST TRAN -1. By the Finance Act of 2020, the words “within such time” were introduced in Section 140, with retrospective effect from 01.07.2020, thereby conferring expressly the power to prescribe time limits in Section 140 even without relying entirely on the generic Section 164. In this statutory context, there are reason to conclude that Rule 117 of the CGST Rules is intra vires Section 140 of the CGST Act but none to conclude otherwise. Whether the time limit in Section 19(11) of TNVAT is mandatory or directory? - HELD THAT:- The said Section 19(11) also pertains to the time limit for claiming ITC and uses the word "shall". After examining the language of Section 19(11) and the context, including the object and design of the statute, the Hon'ble Supreme Court concluded that the time limit specified in Section 19(11) is mandatory. In this case, the peremptory word "shall" is used. The relevant rule deals with the time limit for availing Transitional ITC by carrying it forward from the credit balance under tax legislations which have been repealed and replaced by the CGST Act. Thus, the object and purpose of Section 140 clearly warrants the necessity to be finite. ITC has been held to be a concession and not a vested right. In effect, it is a time limit relating to the availing of a concession or benefit. If construed as mandatory, the substantive rights of the assessees would be impacted; equally, if construed as directory, it would adversely impact the Government's revenue interest, including the predictability thereof. On weighing all the relevant factors, which may be not be conclusive in isolation, in the balance, we conclude that the time limit is mandatory and not directory. Also, Rule 117 specifies that the return in Form GST TRAN – 1 is required to be filed electronically on the common portal - This requirement is not satisfied by handing over the form in person to the Sales Tax Collection Inspector, Tiruvannamalai. Consequently, in our view, the Petitioner has completely failed to make out a case to direct the Respondents to permit the Petitioner to file Form GST TRAN -1 and claim the Transitional ITC of ₹ 4,70,008/-. Petition dismissed.
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