TMI Blog2022 (7) TMI 182X X X X Extracts X X X X X X X X Extracts X X X X ..... e 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 that the due date as contemplated under Rule 117 of the CGST Rules for the purposes of claiming transitional credit are held to be procedural in nature and should not be construed mandatory. Indisputably, the writ applicant company at relevant stage though, belatedly had applied for filing of Form TRAN 1 to avail the Input Tax Credit of the accumulated CENVAT credit as of 30.06.2017 as reflected in their letter dated 05.04.2018. The reason explained by the writ applicant for the delayed uploading of the Form appears to be genuine as the bank account of the writ applicant company was declared Non Performing Account - It is not in dispute that substantial amount to the tune of Rs.2,41,33,827/- were lying in the account of erstwhile regime and pursuant to the Notification dated 10.09.2018, the writ a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 Act, 2017 vide Registration bearing GSTN No.24AADCT4916E1ZL. Since the writ applicant company meets with all the conditions as set out for the availment of benefit of Input Tax Credit upon the accumulated CENVAT credit as of 30.06.2017, applied for the same by filing declaration FORM TRAN 1. 2.3 It is the case of the writ applicant that the writ applicant company was facing financial constrains and in fact, the bank account of the writ applicant company was declared as NPA (Non Performing Assets) by COSMOS Co-operative Bank Ltd. and in absence of sufficient staff, the writ applicant company could not filed TRAN 1 on or before the notified date i.e. 27.12.2017. In such circumstances, since the last date for filing TRAN 1 having lapsed, the writ applicant company approached the respondent authority. However, the help desk of the respondent authority responded vid ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aid 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, the same is no more res-integra. In one of such decision, the High Court of Delhi had an occasion to consider the similar objections raised by the respondent authorities more particularly, that there was no technical anomalies to the tax payers from filing of Form TRAN-1 on the common GST portal. The stand of the department was that the writ applicant, in absence of sufficient explanation of delay in submitting Form TRAN 1, were not entitled to availing of Input Tax Credit on the accumulated CENVAT credit as of 30.06.2017. The issue was examined and relevant observations of the High Court of Delhi, in the case of Brand Equity Treaties Ltd. Ors. vs. Union of India, reported in [2020] 116 taxmann.com 415 (Delhi), are reproduced as under: 12. On 1st July, 2017, the new indirect tax regime was introduced in the country by way of enactments, including the Central ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 Rules, 2004. [(1A) Notwithstanding anything contained in subrule (1), the Commissioner may, on the recommendations of the Council, extend the date for submitting the declaration electronically in FORM GST TRAN-1 by a further period not beyond [31st December, 2019], in respect of registered persons who could not submit the said declaration by the due date on account of technical difficulties on the common portal and in respect of whom the Council has made a recommendation for such extension.] (2) Every declaration under sub-rule (1) shall- (a) in the case of a claim under sub-section (2) of section 140, specify separately the following particulars in respect of every item of capital goods as on the appointed day- (i) the amount of tax or duty availed or utilized by way of input tax credit under each of the existing laws till the appointed day; and (ii) the amount of tax or duty yet ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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, and directions were issued to the respondents to permit the filing of TRAN-1 Form beyond the extended date. Some cases where such reliefs have been granted by this Court are M/s Blue Bird Pure Pvt. Limited vs. Union of India 2019 SCC OnLine 9250; SARE Realty Projects Pvt. Limited vs. Union of India [W.P.(C) 1300/2018decided on 1st August, 2018] ,Bhargava Motors vs. Union of India [W.P.(C) 1280/2019 decision dated 13th May, 2019] ; Kusum Enterprises Pvt. Limited vs. Union of India [W.P. (C) 7423/2019 decided on 12th July, 2019]. It would also be worthwhile to note that in this period, the government also acknowledged that on account of technical difficulties, the taxpayers were indeed unable to file the statutory form within time and CBIC vide notifications issued from time to time, extended the date prescribed for filing of Form GST TRAN-1 under Rule 117 (1A) of the CGST Rules. This period, as on date, is being extended by various ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ax 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 seamlessly. In the said proceedings, we had also held a special hearing inviting the senior officials from the GSTN network as well as the officers of the Council and the policy makers. As a result of such deliberations, some headway has been made and recently we were informed that the respondents have revamped the GST redressal mechanism so as to address the problems at a grass-root level. The upshot of this experience is that the GSTN network, indeed, is riddled with shortcomings and inadequacies. This is palpably evident from the sheer number of cases being presented before us, in relation to such technical difficulties and inadequacies. The benchmark, in our view, is that the online system brought into force by the GSTN Ltd. should be able to perform all functions and should have all flexibilities/options, which were available in the pre-GST regime. The problems on the GSTN cannot be wished away, and have to be resolved in the right earnest. T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sion 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 recommendations of the Council. Indeed, the Commissioner has exercised such power and time period which was initially to expire after 90 days, has been, as a matter of fact, extended till 29th December, 2017. In fact, as noticed above, under Sub-Rule (1A) of Rule 117, for a specific class of persons, the time limit has gone way beyond the period originally envisaged, and has still not expired. Thus, there is nothing sacrosanct about the time limit so provided. It is not as if the Act completely restricts the transition of CENVAT credit in the GST regime by a particular date, and there is no rationale for curtailing the said period, except under the law of limitations. The period of 90 days has no rationale and as noted above, extensions have been granted by the Government from time to time, largely on account of its inefficient network. 18. In above noted circumstances, the arbitrary classification, introduced by way of sub Rule (1A), ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 glitch as per their GST system laws, as there is no information stored/logged that would indicate that the taxpayers attempted to save/submit the filing of Form GST TRAN-1. Thus, the phrase technical difficulty is being given a restrictive meaning which is supplied by the GST system logs. Conscious of the circumstances that are prevailing, we feel that taxpayers cannot be robbed of their valuable rights on an unreasonable and unfounded basis of them not having filed TRAN-1 Form within 90 days, when civil rights can be enforced within a period of three years from the date of commencement of limitation under the Limitation Act, 1963. 19. The introduction of Sub rule (1A) in Rule 117 is a patchwork solution that does not recognise the entirety of the situation. It sneaks in an exception, without addressing situations taken note of by us. This exception, as worded, is an artificial construction of technical difficulties, limiting it to tho ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 rules, without there being any overarching provision in the GST Act. We have, in our judgment in A.B. Pal Electricals (supra) emphasized that the credit standing in favour of the assessee is a vested property right under Article 300A of the Constitution and cannot be taken away by prescribing a time-limit for availing the same. 21. Lastly, we also find merit in the submissions of the petitioners that Rule 117, whereby the mechanism for availing the credits has been prescribed, is procedural and directory, and cannot affect the substantive right of the registered taxpayer to avail of the existing / accrued and vested CENVAT credit. The procedure could not run contrary to the substantive right vested under sub Section (1) of Section 140. While interpreting Order VIII Rule 1 CPC, the Supreme Court has observed that the time limit for filing written statement is directory in nature and not mandatory, and that procedural law is not to be a tyrant ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ject 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 with the said purpose. 22. We, therefore, have no hesitation in reading down the said provision [ Rule 117] as being directory in nature, insofar as it prescribes the time-limit for transitioning of credit and therefore, the same would not result in the forfeiture of the rights, in case the credit is not availed within the period prescribed. This however, does not mean that the availing of CENVAT credit can be in perpetuity. Transitory provisions, as the word indicates, have to be given its due meaning. Transition from pre-GST Regime to GST Regime has not been smooth and therefore, what was reasonable in ideal circumstances is not in the current situation. In absence of any specific provisions under the Act, we would have to hold that in terms of the residuary provisions of the Limitation Act, the period of three years should be the guiding principle and thus a period of three years from the appointed date would be the maximum period for availing o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 that the due date as contemplated under Rule 117 of the CGST Rules for the purposes of claiming transitional credit are held to be procedural in nature and should not be construed mandatory. It transpires that the aforesaid order was challenged by the respondent authorities by preferring Special Leave Petition before the Supreme Court of India. It further transpires that pending the aforesaid SLPs, Misc. Civil Applications being MCA No.3 of 2020 seeking direction for implementation/effect of the order, were preferred by the respective original petitioners. In the said Misc. Civil Applications after various deliberations and orders passed from time to time, pursuant to the efforts made by the learned Additional Solicitor General, the controversy was resolved in asmuch as that in light of the suggestion of the High Court of Calcutta, the assessees facing similar difficulties were permitted to file Individual Tax Credit in GSTR-3B Forms and the concerned ..... X X X X Extracts X X X X X X X X Extracts X X X X
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