2022 (2) TMI 1215 - HC - GST

Refund of the Input Tax Credit and Capital Goods Credit - typographical error - Section 142(11)(b) and Section 142 r/w Section 58(4) of CGST Act 2017 - HELD THAT - The credit which was earned by a registered dealer or an assessee under the erstwhile Tamil Nadu Value Added Tax Act 2006 Central Excise Act 1944 and Finance Act 1994 r/w CENVAT Credit Rules 2004 are indefeasible in nature. The Hon ble Supreme Court in COLLECTOR OF CENTRAL EXCISE PUNE VERSUS DAI ICHI KARKARIA LTD. 1999 (8) TMI 920 - SUPREME COURT has held that credit availed under the provisions of the erstwhile Central Excise Act 1944 and Central Excise Rules 1944 are indefeasible and are intended to reduce the cascading effect of the tax to benefit the consumers. In this case the petitioner had admittedly filed Form GST TRAN- 1 on time viz. 16.11.2017 but with mistakes. If the system which has been put in place to implement the provisions of GST and the Rules made thereunder does not facilitate rectification of mistakes in TRAN-1 such input tax credit has to be refunded back as retention of such amount by the department would be contrary to Article 265 of the Constitution of India. It would amount to collection of tax without authority of law. Ultimately the purpose of allowing an existing assessee to transition the credit was only a facilitation under the provisions of the respective GST Act and the Rules made thereunder - Input tax credit and/or capital goods credit which was validly availed under the provisions of the respective enactments which got subsumed into GST enactment cannot be denied. It has to be allowed to be carried forward for being adjusted towards tax liability under the GST regime if indeed such credit was validly availed lying un-utilized in either the CENVAT account or VAT returns prior to the implementation of GST. The writ petition not withstanding the fact that the petitioner has got an alternate remedy before the Appellate Commissioner against the impugned order as the officers acting under the provisions of the GST Act are bound by limitation under the Act - the respondents are therefore directed to either allow the rectification of TRAN-1 or in the alternative accept manual filling of TRAN-1 or make a suitable credit entry in the Electronic Cash Register of the petitioner after satisfying that the amount sought to be transmitted was indeed lying unutilised in the respective accounts of the petitioner as on 30.06.2017. Petition allowed.

Summary

Issues:
Challenge to Impugned Order on refund of Input Tax Credit and Capital Goods Credit due to mistake in filing TRAN-1 Form.

Analysis:
The petitioner challenged the Impugned Order dated 28.05.2020 by the Assistant Commissioner of GST and Central Excise, Puducherry Division-II, which rejected the petitioner's request for refund of Input Tax Credit and Capital Goods Credit due to a mistake in filing the TRAN-1 Form. The petitioner admitted to a typographical error in claiming credit amounts. The petitioner escalated the issue to the Nodal Officer, but the respondent cited Circulars stating the issue did not fall within their purview. The petitioner sought refund as they were unable to utilize the credits under the new regime.

The respondent argued that the petitioner failed to make correct declarations in the TRAN-1 Form and that the petitioner did not avail the opportunity to file revised returns. The petitioner contended that the system did not allow rectification of mistakes in the TRAN-1 form, leading to the refund request. The Court considered the arguments and provisions of the GST enactments.

The Court referred to the indefeasible nature of credits earned under previous tax laws, citing a Supreme Court case. The Court emphasized that if the system does not allow rectification of mistakes in the TRAN-1 form, the input tax credit should be refunded to avoid collection of tax without legal authority. The Court held that validly availed credits cannot be denied in the GST regime as they were earned legitimately under previous tax laws.

A Division Bench of the Court in a similar case affirmed that denial of Input Tax Credit benefits due to technicalities should not frustrate the purpose of reducing tax cascading effects. The Court allowed the writ petition despite the availability of an alternative remedy, directing the respondents to rectify the TRAN-1 or accept manual filing or make suitable credit entries within a specified timeframe.

In conclusion, the Court allowed the writ petition, directing the respondents to facilitate rectification of TRAN-1 or accept manual filing or make credit entries within a specified period. The judgment emphasized the importance of honoring legitimate credits earned under previous tax laws and ensuring procedural justice in the GST regime.