TMI Blog2020 (6) TMI 385X X X X Extracts X X X X X X X X Extracts X X X X ..... rred while filing a Form, seemingly on account of a bona fide or inadvertent mistake. Instead of offering a restitutive solution they have stonewalled all the attempts made by the Petitioner The injustice and prejudice caused to the Petitioner is profound and it s disillusionment and despair is evident. It cannot be upheld the stand of the respondent which is founded on some illogical understanding of the Rules. We have time and again made adverse remarks on the procedural working of the GST system in several decisions. We may just add that we do not derive any pleasure when we make such observations, as comments of the Court affect the reputation of the administration in the country. Such remarks are made only when we are constrained to do so. The case before us is one where there is a complete lack of understanding and fairness on the part of the Tax Department. The fact that Respondents have done nothing to solve the problem faced by the Petitioner, fueled with the adamant stand before us, contributes to skepticism of GST technical infrastructure, which we feel should and can be easily avoided. Only if Respondents were to engage with the taxpayers with a genuine intention ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ('Credit Rules') and input tax credit of VAT paid on purchases in terms of Maharashtra VAT Act, 2002 ( MVAT Act ). Petitioner periodically filed returns by way of forms specified under the above-noted legislations, and declared the details of input balance of credit, credit availed during the return period, and closing balance of credit available for carry forward for the next period. For the period ending 30th June, 2017, the closing balance of credit available for carry forward, as declared by the Petitioner, reflects the figures tabulated hereunder: Return Amount (Rs.) ER-1 3,86,54,605/- ST-3 1,64,79,081/- Form 231 1,01,24,382/- TOTAL 6,52,58,081/- 3. The indirect tax regime had its watershed moment with the advent of the Goods and Service Tax, which has become operational by way of several enactments [hereinafter referred as GST laws ], w.e.f. 1st July, 2017 ( Appointed Date ) and existing laws stand repealed. The GST laws framed by t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed request ID and informed the Petitioner that they were working on the issue and the status thereof shall be updated and intimated. 6. Thereafter, the Petitioner vide letter dated 6th February, 2018, made further representations to the Assistant Commissioner of CGST as also to Principal Commissioner of CGST, Pune Commissionerate. However, the said complaint did not translate into any positive outcome. In the meantime, CBIC issued a circular granting relief to taxpayers who had faced IT glitches at the stage of filing original or revised return on the Goods and Service Tax Network ( GSTN ) portal. Petitioner worked towards availing the benefit of the said circular and submitted a representation dated 12th April, 2018 to the Deputy Commissioner of CGST as also Principal Commissioner of CGST, but this attempt also turned out to be futile. Subsequently, Respondents issued a trade notice No. 33/2018 dated 19th April, 2018 intimating about the formation of IT Grievance Redressal Committee ( ITGRC ) for the purpose of resolution of difficulties faced by taxpayers in filing returns Forms. In order to avail the benefit of the said notice, Petitioner, yet again pursued the matter with ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g. The said is extracted hereunder: 1. In the light of the note placed on record by Shri Mishra annexing therewith the Office Memorandum dated 19th February, 2019 issued by the Government of India, Goods and Service Tax Council seeking to address certain non technical issues, namely, human errors and putting in place a mechanism to take corrective measures, we do not think anything survives in this writ petition . It is disposed of. 2. However, the learned counsel for the petitioner brings to our notice that the cut-off date mentioned in this Office Memorandum is 25th February, 2019 whereas this Office Memorandum is dated 19th February, 2019. This period is hopelessly inadequate for accessing the authorities and by emode. On instructions, Shri Mishra says that if the petitioner forwards its requests or grievances within a period of one week from today, the concerned authorities will attempt to redress them and will not throw them out only on the ground that they are received beyond the cut-off date. The statement made by Shri Mishra, on instructions, is accepted as an undertaking to this Court. (Emphasis Supplied) 9. Accordingly, Petitioner filed yet ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... filed the statutory GST TRAN-I form within the specified time. However, since there was a bona fide error in filling the same, the Petitioner filed a revised return correcting the same and yet, the entire credit is still not exhibited in the electronic credit ledger. The short transitioning is due to some problem at Respondent s end. The issue was flagged, but was not rectified on account of frivolous and baseless reasons. He further argued that Petitioner has been tirelessly following up with the Respondent and submitted a litany of complaints and representations, however all of those have fallen on deaf ears. The conduct of the Respondents reflects their narrow mindset and attitude in resolution of troubles faced by taxpayers. They are only interested in finding ways and means to deny the Petitioner the benefit which is legitimately due to it. Learned counsel for the Petitioner also relied upon several decisions such as Blue Bird Pure Private Limited (Delhi High Court) W.P.(C) 3798/2019, Adfert Technologies Private Limited (P H High Court) CWP No. 30949/2018(O M), Vertiv Energy India Private Limited (Delhi High Court) W.P.(C) 10811/2018, Lease Plan India Private Limited (Delhi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ailed within the period prescribed therein. Accordingly, this Court allowed taxpayers to avail the input tax credit by permitting them to file TRAN-1 form on or before 30th June, 2020. Learned counsel for the Petitioner further submitted that irrespective of the said decision, since admittedly the TRAN-1 form in the case of the Petitioner was filed well before the specified date, notwithstanding the benefit granted by the Court in the said judgment, the Petitioner is entitled to transition the credit. 13. Mr. Harpreet Singh, Senior Standing Counsel for GST on the other hand opposed the petition and submitted that the Petitioner is not entitled to the benefit being sought in the present petition. Mr. Harpreet Singh argued that the Petitioner can also not avail the benefit of the judgment of this Court in the case of Brand EquityTreaties Ltd. (supra), as recently, with the passing of the Finance (Amendment) Act, 2020 which has been given presidential assent on 27th March, 2020, Section 140 of the CGST Act has been retrospectively amended. He submits that vide Section 128 of the Finance (Amendment) Act, 2020, the words within such time have been inserted in Section 140 (1) an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Electronic Credit Ledger of the Petitioner Erstwhile Return Amount (Rs.) Amount (Rs.) Amount (Rs.) ER-1 (Excise) 3,86,54,605/- 1,01,24,382/- 5,51,33,699/- ST-3 (Service Tax) 1,64,79,094/- Form 231 (Maharashtra VAT) 1,01,24,382/- TOTAL 6,52,58,081/- 1,01,24,382/- 5,51,33,699/- 15. The aforesaid error occurred while filing the requisite TRAN-1 , as apparently Petitioner failed to fill in the correct details in the right column, which is evident from the screenshot of Form GST TRAN-1, annexed along with the petition. The same is extracted hereinbelow: Sr.No. Registration no. under existing law Tax period Date of filing of the return Balance CENVAT credit CENVAT Credit admissible as ITC 1. AACCV0528KXM001 062017 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... payers and authorities is entirely electronic. This requires some basic fundamental knowledge for using the technology. Since GST law is a major tax reform in indirect taxation, the difficulties faced in filing of the statutory forms is understandable. In this process, human errors cannot be ruled out and if they occur, the solution is not to criticize the taxpayer for the fault, but instead, the Government should endeavour to find a resolution. The government should support its citizens by making the burden of compliance and payment as simple as possible. The intent and efforts of the Government should be to extend proper assistance, information and education to taxpayers so that they fulfil their obligations. This should be the critical area of focus in the area of tax administration which would ensure compliance with tax laws and also build confidence amongst taxpayers. Indeed, by explaining the significance of payment of taxes, and the role that a taxpayer plays in building the nation, the Government endeavors to encourage and motivate the citizens to be tax compliant. If we strive to achieve this goal, it is necessary that we must also provide appropriate channels for resoluti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ny time limit for availing the transition of the input tax credit. There are several other grounds and reasons enumerated in the said decision and discussed hereinafter, that continue to apply with full rigour even today, regardless of amendment to Section 140 of the CGST Act. Arbitrary distinction of timelines under Rules 117 117 (IA) 21. Petitioner s case has been rejected on the ground of being nontechnical human error and the benefit of Rule 117(1A) has not been given. Let us elaborate on this aspect and note some of the relevant provisions. Here, we are concerned only with sub-section (1) of section 140 and Rule 117 and 117(1A). The same are extracted below: Amended Section 140 of the CGST Act 140. (1) A registered person, other than a person opting to pay tax under section 10, shall be entitled to take, in his electronic credit ledger, the amount of CENVAT credit carried forward in the return relating to the period ending with the day immediately preceding the appointed day, furnished by him under the existing law within such time and in such manner as may be prescribed: Rule 117 and Rule 117 (1A) 117. Tax or duty credit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... opened a narrow window for registered persons who faced technical difficulties on the common portal while filing Form TRAN-1. The Central Government has been consistently extending the time period for filing the Form TRAN-1 even beyond 31.12.2019 for those taxpayers who are covered by Rule 117 (1A). Recently in view of the order No. 01/2020-GST dated 7th February, 2020 issued by Government of India, Ministry of Finance, the period was extended upto 31st March 2020. Thus, when we contrast the time limit stipulated under Rule 117 (1) and Rule 117(1A), we find that the time limit of 90 days is not sacrosanct. In Brand Equity (supra), that court has observed that the government has not ascribed any meaning to the words technical difficulties on the common portal and it cannot be interpreted in a restrictive manner. The relevant portion is extracted hereinbelow: 18. In above noted circumstances, the arbitrary classification, introduced by way of sub Rule (1A), restricting the benefit only to taxpayers whose cases are covered by technical difficulties on common portal subject to recommendations of the GST Council, is arbitrary, vague and unreasonable. What does the phrase tech ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ere 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 those existing on the common portal. It is unfair to create this distinction and restrict it to technical snags alone. In our view, there could be various different types of technical difficulties occurring on the common portal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion 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. . 23. The aforesaid reasoning still holds good. Additionally, we would like to observe that the rule suffers from the vice of vagueness and concept of technical difficulty on common portal and its applicability has not been adequately defined anywhere. Because of absence of any defining words, there is no predictability about the application of this Rule for the class of cases to which it would apply, as is demonstrated in the case in hand. In absence of a criteria, the application of the provision would suffer from arbitrariness. It would be apposite to note that the GST Council in its 32nd meeting expanded the mandate of ITGRC to include those cases where the taxpayers who had been victims of the system failure, whether technical or otherwise. This becomes evident from the office memorandum of GST Council, dated 19th February 2019, re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rrently. As the tax charged by the Central or the State Governments would be part of the same tax regime, credit of tax paid at every stage would be available as set-off for payment of tax at every subsequent stage. ( Ref: GST Flyer; CBIC Website) Significantly, for the cases covered under Section 140 (1) of the CGST act, ITC under the existing laws is a vested right. This credit stood vested in favour of the taxpayer and would have been utilized for payment of outgoing taxes under the respective legislations, but for the repeal of the existing laws. In order to claim this credit, declaration in form GST TRAN-1 is required to be furnished on the common portal within ninety days from the appointed day i.e. 1st July, 2017 or within such extended time. Thus, the closing balance of the CENVAT credit /VAT in the last returns filed under the existing law can be taken as credit in electronic credit ledger. Such credit would be available only when returns for the previous last six months have been filed under the existing laws. Thus, on analysis of the provisions of Central Goods and Service Tax Act and the Rules framed thereunder, the mind of the legislature on input tax credit becomes c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... been granted for taxpayers who faced technical difficulties on common portal . Yet, deserving nontechnical cases like the present one have been ignored and this exclusion is arbitrary and irrational. Moreover, if we were to look for a provision in the statute that would stipulate a consequence for failure to adhere to the timelines, we would find none. Rule 117 of the CGST rules also does not indicate any consequence for non-compliance of the condition. Both the Act and Rules do not provide any specific consequence on failure to adhere to the timelines. Since the consequences for non-consequence are not indicated, the provision has to be seen as directory. Pertinently, nonobservance of the timelines would prejudice only one party- the registered person/taxpayer. If we interpret the timelines to be mandatory, the failure to fulfil the obligation of filing TRAN-1 within the stipulated period, would seriously prejudice the taxpayers, for whose benefit section 140 has been provided by the legislature. In view of the above discussion, interpreting the procedural timelines to be mandatory would run counter to the intention of the legislature and defeat the purpose for which the transi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... evision of the said return, will be time-barred and treated to be a fresh return. The revised data can be easily verified and correlated with the tax returns filed in the erstwhile regime. In fact, Rule 120A of CGST Rules is an enabling provision that can be resorted to, by the taxpayers to revise the Form GST TRAN-1 on the common portal within the time specified in the rules or such further period as may be extended by the Commissioner. In the present case, the mistake was clerical in nature. It is the Respondents who have, for specious reasons, denied this opportunity to the Petitioner. Therefore, the revision cannot be treated as a fresh filing , especially, keeping in view the spirit of the spirit of 32nd meeting of GST Council, referred above Non-disclosure of reasons for denying claim of the Petitioner and arbitrariness in rejection. 27. There is yet another reason that entitles the Petitioner to the relief sought in the present petition. Petitioner s case was considered and rejected by the IT Grievance Redressal Committee, despite the recommendation of the Jurisdictional Commissionerate. It is also pertinent to note that the Respondents had given an undertaking b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... peaking order relied upon to justify the rejection cannot be countenanced. Viewed from another angle, one can construe Petitioner s difficulty as technical in nature, as the short credit is reflected as blocked credit on the portal, with no provision to rectify the same electronically. In absence of any clause defining technical difficulty on common portal , as discussed above, Petitioner s case would even be covered by Rule 117 (1A) of the CGST Rules. GST laws required taxpayers to embrace transformative new ways. The use of technology can be daunting for many taxpayers who hitherto before, were largely dependent on conventional manual filings of returns. In order to overcome the resistance to change and encourage transformation and remodeling of the entire accounting structure at taxpayers end, the electronic mode should be user friendly. Sadly, the Respondents have not helped the situation, despite all the good intentions they may have. They have further compounded the problems for the taxpayers by being adamant about their stand and exhibited no flexibility in approach. The exactness required in compliance of tax provisions should not be construed so rigidly that permissible ..... X X X X Extracts X X X X X X X X Extracts X X X X
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