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2019 (11) TMI 710 - HC - GSTInput tax credit - shifting to GST regime - transitional credit - section 140 of the CGST Act - rectification of mistake in the declaration filed in FORM GST TRAN-1 - case of Revenue is that the petitioner, after the expiry of approximately two months from the last date of filing FORM GST TRAN-1 viz. 27th December, 2017, had requested the department on 19th February, 2018, to correct the mistake in the declaration filed in FORM GST TRAN-1 - non-compliance with the rule 117 of the CGST Rules - HELD THAT - In terms of rule 117 of the CGST Rules, FORM GST TRAN-1 was required to be filed within the prescribed time limit. Such time limit was extended by the Central Government from time to time and was lastly extended till 27th December, 2017. It is an admitted position that the petitioner had filed the FORM GST TRAN-1 within the time prescribed in the rules. However, there was an inadvertent mistake on the part of the petitioner in not mentioning the details of ₹ 83,99,136/- in column 6 of Table 5a and instead of which the petitioner had uploaded the details in column 5 of Table 5a due to misunderstanding of the form - It is only when it was noticed by the petitioner that due to inadvertent error, the form had not been correctly filled in, resulting the petitioner being denied input tax to the extent of ₹ 83,99,136/-, that the petitioner sought to revise the form and sought the advice of the department. The petitioner, accordingly, addressed several communications to the respondents in respect of his genuine grievance; however to no avail. In the case of Bhargava Motors v . Union of India 2019 (5) TMI 899 - DELHI HIGH COURT , where the Delhi High Court is satisfied that the Petitioner s difficulty in filling up a correct credit amount in the TRAN-1 form is a genuine one which should not preclude him from having his claim examined by the authorities in accordance with law. Adverting to the facts of the present case, considering the averments made in the affidavit-in-reply filed on behalf of the respondents, it is manifest that it is an admitted position that the petitioner was entitled to credit of ₹ 83,99,136/- in addition to credit of ₹ 8,64,055/- (which came to be allowed as it was correctly mentioned). The only reason for denying credit of such a huge amount of ₹ 83,99,136/- is that the time limit for filing a revised TRAN-1 form has elapsed on 27th December, 2017 - the substantive right of the petitioner to claim transitional credit of such amount is sought to be denied on the ground that the time limit for filing revised FORM GST TRAN-1 has elapsed. In the opinion of this court, the respondents ought to have provided in the system itself a facility for rectification of such errors which are clearly bona fide. Besides, although the system provided for revision of a return, the deadline for making the revision coincided with the last date for filing the return, that is, 27th December, 2017. Thus, such facility was rendered impractical and meaningless - This court is further of the view that retention of the amount of ₹ 83,99,136/- by the respondents which the petitioner is otherwise entitled to get by way of transitional credit would be directly hit by article 265 of the Constitution of India which provides that no tax shall be levied or collected except by authority of law. The action of the respondents in denying transitional credit of the sum of ₹ 83,99,136/-, which even according to the respondents, the petitioner is otherwise entitled by way of transitional credit, cannot be sustained - The respondents are directed to either open the online portal so as to enable the petitioner to again file the rectified FORM GST TRAN-1 electronically or accept the manually filed FORM GST TRAN-1 with corrections on or before 30th November, 2019 - petition allowed.
Issues Involved:
1. Entitlement to Input Tax Credit (ITC) under Section 140 of the CGST Act. 2. Procedural compliance with Rule 117 of the CGST Rules. 3. Inadvertent errors in filing Form GST TRAN-1. 4. Legal provisions for revision of Form GST TRAN-1 under Rule 120A. 5. Substantive rights vs. procedural requirements. 6. Judicial precedents on similar issues. Detailed Analysis: 1. Entitlement to Input Tax Credit (ITC) under Section 140 of the CGST Act: The petitioner sought the grant of input tax credit in terms of Section 140 of the CGST Act, 2017, read with Rule 117 of the CGST Rules, 2017. The petitioner was engaged in the manufacture of electrical wiring accessories and had transitional credit to be claimed under various subsections of Section 140. The petitioner was entitled to input credit of closing balance under ER-1, unavailed credit of capital goods, and input or input services for which duty was already paid under the erstwhile Central Excise Act and service tax under the Finance Act, 1994. 2. Procedural compliance with Rule 117 of the CGST Rules: Rule 117 provides a mechanism to avail credit carried forward under any existing law or on goods held in stock on the appointed day. The petitioner was required to file Form GST TRAN-1 within 90 days of the appointed day, which could be extended for another 90 days. The petitioner filed Form GST TRAN-1 but due to a misunderstanding, entered the details of Rs. 83,99,136/- in the wrong column, resulting in the denial of this credit. 3. Inadvertent errors in filing Form GST TRAN-1: The petitioner inadvertently mentioned the balance cenvat credit in the wrong column of Form GST TRAN-1 due to misunderstanding the form's language. This error led to the petitioner being granted only Rs. 8,64,055/- as transitional credit, while the remaining Rs. 83,99,136/- was denied. Despite several communications to the respondents, the petitioner’s grievance remained unaddressed. 4. Legal provisions for revision of Form GST TRAN-1 under Rule 120A: Rule 120A allows for the revision of Form GST TRAN-1 within the specified period. However, the last date for filing and revising Form GST TRAN-1 was 27th December 2017. The petitioner filed the form on 23rd December 2017 and noticed the error only after the deadline had passed, making it impossible to revise the form within the stipulated time. 5. Substantive rights vs. procedural requirements: The petitioner argued that the substantive right to claim input tax credit should not be curtailed by procedural lapses. The petitioner contended that the time limits prescribed under Rule 117 and Rule 120A are beyond the mandate of Section 140 of the CGST Act, which only allows the government to prescribe the manner of claiming credit but not to impose conditions for denial of credit. 6. Judicial precedents on similar issues: The petitioner relied on decisions from the Delhi High Court, which addressed similar issues. In cases like M/s Blue Bird Pure Pvt. Ltd. and M/s Aadinath Industries, the court held that the respondents should provide a facility for rectification of bona fide errors and that the credit standing in favor of an assessee is a property right protected under Article 300A of the Constitution of India. The court directed the respondents to either open the online portal for filing rectified forms or accept manually filed forms with corrections. Judgment: The court noted that the petitioner had filed Form GST TRAN-1 within the prescribed time but due to an inadvertent error, mentioned the details in the wrong column. The court observed that the respondents should have provided a facility for rectification of such bona fide errors. Retaining the amount of Rs. 83,99,136/- to which the petitioner was entitled would violate Article 265 of the Constitution of India, which mandates that no tax shall be levied or collected except by authority of law. Conclusion: The court allowed the petition, directing the respondents to either open the online portal to enable the petitioner to file the rectified Form GST TRAN-1 electronically or to accept the manually filed Form GST TRAN-1 with corrections by 30th November 2019. The rule was made absolute with no order as to costs.
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