TMI Blog2022 (8) TMI 865X X X X Extracts X X X X X X X X Extracts X X X X ..... ludes the issue as to whether the timelines seeking transition under 140 and 117 are mandatory or directory and the same is pending declaration. In M/S. BHARAT ELECTRONICS LIMITED VERSUS COMMISSIONER OF GST CENTRAL EXCISE, ASSISTANT COMMISSIONER OF GST CENTRAL EXCISE, CENTRAL BOARD OF EXCISE CUSTOMS, PRINCIPAL COMMISSIONER, CHENNAI NORTH COMMISSIONERATE, CHENNAI [ 2021 (7) TMI 334 - MADRAS HIGH COURT] , it is held that it does not stand to reason that the time limit for revision of a TRAN 1 return be identical to the timeline for filing of a return seeking transition. The purpose of revision is to enable correction/modification of a return of transition. In such an event, it would stand to reason that some additional time, over and above the timeline granted for a TRAN-1 return be provided by the respondent, in the later instance. Rule 120A does not, by itself, stipulate any time limit, though undoubtedly, the timeline stated under Rule 117 has to be read into Rule 120 as well. This would not, lead to a conclusion that the application of Rules 117 and 120A cannot be harmonized, to make them workable, viable and practical - the timelines under Rule 120A must be of a peri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ers adapt to as well as the officials of the Department to adopt to the new procedure. (vii) The extension of time limits are from 29.09.2017 to 31.10.2017 vide order No. 2/2017 dated 18.09.2017, upto 30.11.2017 vide order No. 7/2017 dated 28.10.2017 and thereafter upto 27.12.2017 vide order No.10/2017 dated 15.11.2017. (viii) Parallelly, Rule 120A provided for revision of the TRAN-1 already filed. (ix) Rule 120A did not, in itself, provide for atime limit for revision but indicated that such limits may be inferred from the timelines as set out under Rule 117. (x) Thus, the extension of timelines granted in respect of filing of TRAN-1 under Rule 117 applied equally in respect of the timelines for revision as well. (xi) As a consequence, the time limit for revision of TRAN also ended on 27.12.2017 by implication, as under order No.10/2017 dated 15.11.2017. (xii) The petitioner uploaded its TRAN-1 on 27.12.2017 claiming transition of the CENVAT credit balance. However, an error had been occasioned therein wherein instead of mentioning the amount as Rs.16,21,227/- as per ER 1 return filed for the month of June 2017, it had mistakenly referred to the amount as Rs.76,3 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he First Bench of this Court in the case of P.R.Mani Electronics Vs. Union of India , [(2020) 39 GSTL 3]. Learned Standing Counsel would point out that in that case the Bench has categorically concluded that the time limit for availment of credit by transition is mandatory and not directory. 10. Reference is made to para 17 wherein the Bench states as follows: 17. Section 140 of the CGST Act read with Rule 117 of the CGST Rules enables a registered person to carry forward the accumulated ITC under erstwhile tax legislations and claim the same under the CGST Act. In effect, it is a transitional provision as is evident both from Section 140 and Rule 117. In light of the judgment of the Supreme Court in Jayam, the contention of the learned counsel for the Petitioner to the effect that ITC is the property of the Petitioner cannot be countenanced and ITC has to be construed as a concession. In addition, it is evident that ITC cannot be availed of without complying with the conditions prescribed in relation thereto. Prior to the amendment to Section 140 of the CGST Act, the power to frame rules fixing a time limit was arguably not traceable to the unamended Section 140 of the CGS ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mbay High Court in Nelco that both ITC and Transitional ITC cannot be availed of except within the stipulated time limit. Such time limits may, however, be extended through statutory intervention. As stated earlier, in SKH Sheet Metals, the Delhi High Court observed that ITC is the heart and soul of GST legislations in as much as such legislations are designed to prevent the cascading of taxes. There can be no quarrel with this conceptual position; however, it is not a logical corollary thereof that time limits for availing ITC and, in particular, Transitional ITC, are inimical to the object and purpose of the statute. 18. In judgments such as Union of India v. A.K. Pandey [(2009) 10 SCC 552] and Bachhan Devi v. Nagar Nigam [(2008) 12 SCC 372], the Supreme Court held that the use of words such as shall or may are not conclusive or determinative of the mandatory or permissive nature of a provision. In C. Bright v. The District Collector, [2019 SCC Online Mad 2460], after considering a number of judgments of the Supreme Court, a Division Bench of this Court captured the relevant factors to determine whether a provision is directory or mandatory, illustratively, in paragraph ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f is constitutionally impermissible? (2) Whether the time limit imposed in Rule 117 of the CGST Rules is mandatory or directory? (3) Whether Section 140 of the CGST Act read with Rule 117 of the CGST Rules divests the assessee of an alleged vested right or whether it prescribes conditions relating to the enforcement of such right? (4) Whether the assessee has a legitimate expectation that the Input Tax Credit availed under the erstwhile tax regime should be permitted to be transitioned to the new tax regime without imposing a time limit? (5) Whether the deprivation of the benefit of transitional Input Tax Credit would amount to double taxation of the assessee as alleged? 13. Thus, the question of whether the time limit imposed under Rule 117 of the CGST Rule was mandatory or directory is at large before the Bench and is not a concluded issue as on date. In crystallizing the issue for resolution, the Bench at para 4 of the aforesaid order referred to various judgment of the Supreme Court and the High Court as follows: 4. In this connection, learned counsel for the petitioner further contends that Section 174(2)(c) of the CGST Act protects such vested righ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re issued to the respondent to permit availment of credit within the extended timelines as granted by the Court. 16. Yet another observation made by the Bench relates to the fact that mere transition does not create any vested right upon the assessee as the eligibility to credit is an entirely different matter that would be tested by the Assessing Authority in their respective assessments. Thus, transition for itself does not create any benefit in favour of the petitioner except to carry forward accumulated credits, the eligibility to which will be tested at a later point in time. 17. Paragraphs 20 and 26 are relevant and are extracted below: 20. The above decision would also cover the case of the Petitioners, and there can be no two views about this proposition and we would like to extend similar benefit to them. Nevertheless, let s delve into the more fundamental question - Whether the Government could curtail the accrued and vested right, and restrict it to 90 days by a subordinate legislation? To answer this vexed query, let s first examine the legal provisions. Sub-section (1) of Section 140 which deals with the transitory provision, permits carry forward of the CENV ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... crosanct 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. ....... 26. 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 provisi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tronically. We agree with the submission of the appellant that any indulgence shown contrary to the statutory mandate would not only be an illegality but in reality, would simply lead to chaotic situation and collapse of tax administration of Union, States and Union Territories. Resultantly, assessee cannot be permitted to unilaterally carry out rectification of his returns submitted electronically in Form GSTR-3B, which inevitably would affect the obligations and liabilities of other stakeholders, because of the cascading effect in their electronic records. 20. Learned Standing Counsel would thus reiterate that the timelines under the CGST Act and Rules are sacrosanct and cannot be breached under any circumstances. The ratio of the aforesaid decision, in his submission, would apply to the present issue as well and as a consequence there could be no tampering with the timelines mentioned under Rule 120A. 21. I have considered the detailed submissions made as well as devoted anxious study to the judgments referred. 22. I am of the considered view that the issue that arises before me stands on a different footing from that that arose in the decisions that have been cited an ..... X X X X Extracts X X X X X X X X Extracts X X X X
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