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2020 (3) TMI 1087 - HC - GSTFiling of Form GST TRAN-1 - time limit for filing of the form - Petitioner has challenged the Rule 117 of the Central Goods and Services Tax Rules, 2017 as ultra-vires Sections 140(1), 140(2), 140(3) and 140(5) of the Central Goods and Services Act, 2017 to the extent that it prescribes a time limit for filing of TRAN-1 Form. Challenge to the impugned Rule on the ground of it being ultravires of the parent statute - HELD THAT - The time limit in Rule 117(1) is traceable to the rule-making power conferred in Section 164(2). The credit envisaged under Section 140(1) being a concession, it can be regulated by placing a time limit. Therefore, the time limit under Rule 117(1) is not ultra-vires of the Act - In view of the finding that the rule-making power exists for Rule 117 and traceable to Section 164, laying the Rule before the Parliament strengthen the case of the Respondents for supporting its validity. Challenge on the ground of the Rule being unreasonable and violative of Article 14 of the Constitution on India - HELD THAT - The GST Act deals with the generation and distribution of the revenue. The collected revenue is expended on various functions for which budgetary allocations are made and time limits are stipulated for the execution of various schemes. For fiscal planning, certainty regarding receipt and distribution of revenue is necessary. If relief is to be granted to the individual Petitioner overriding the time limit on equity, the perception of what is equitable will differ from authority to authority. This would lead to uncertainty. The operation of this complicated tax system will become unworkable. The time limit placed under the impugned rule being rooted in need to have certainty in fiscal management, we are of the opinion that equity jurisdiction ought not to be exercised - the time limit stipulated under Rule 117 is neither unreasonable or arbitrary nor violative of Article 14. This rule is in accordance with the purpose laid down in the Act. Meaning of the phrase technical difficulties under Rule 117(1A) and the role of the IT Redressal Cell and whether by creating categories discretion is being fettered - HELD THAT - The categorization made by the Cell is not fettering the discretion but involving rules of evidence to determine whether a registered user encountered difficulties while submitting forms on the common portal. It is only if the registered user encountered technical difficulties on the common portal, that Rule 117(1A) comes into play - The input tax credit in the transitional provision is a concession to be utilised in a time-bound manner, and further extension is given if the GST Council finds that there was a technical difficulty at its end. If there is no technical difficulty on the common portal for the registered user, this additional concession is not extended. Whether to grant further concession as Rule 117(1A) will be determined from examination the system logs from the portal. Exercise of equity jurisdiction in some cases and not in other cases would cause an anomalous situation, particularly when a time limit has been placed in a taxing statute for achieving certainty and finality. Relief to the petitioner - HELD THAT - The time limit stipulated under Rule 117 of the Rules is not ultra vires of the Act. This Rule is traceable to the power conferred under section 164(2) of the Act. The time limit stipulated in Rule 117 is in consonance with the transitional nature of the enactment, and it is neither arbitrary nor unreasonable. Availment of input tax credit under section 140(1) is a concession attached with conditions of its exercise within the time limit. The IT Grievance Redressal Cell is set up by the GST Council to examine the existence of technical difficulties on the common portal. Sufficient guidance is provided in the definition of technical difficulty in Rule 117(1A). Examining the system log to ascertain the existence of technical difficulties on the common portal for registered persons, is not arbitrary, nor does it lead to a fettering of discretion by the authorities - Those registered persons who could not submit the declaration by the due date because of technical difficulties on the common portal as can be evidenced from the system logs are given an extension on the recommendation of the Council. Where no such evidence is forthcoming, no recommendation is made. In the Petitioner s case, no such proof emerges and, therefore, no direction as sought for can be issued. Petition dismissed.
Issues Involved:
1. Ultra-vires of Rule 117 of the Central Goods and Services Tax Rules, 2017. 2. Violation of Article 14 of the Constitution of India. 3. Meaning of 'technical difficulties' under Rule 117(1A) and the role of the IT Redressal Cell. 4. Relief to the Petitioner. Issue-wise Detailed Analysis: 1. Ultra-vires of Rule 117 of the Central Goods and Services Tax Rules, 2017: - The Petitioner contended that Rule 117 is ultra-vires of Section 140 of the CGST Act as it prescribes a time limit for filing TRAN-1 Form which is not traceable to any provision of the Act. The phrase "prescribed manner" in Section 140 does not include the power to impose a time limit. - The Respondents argued that Section 164(2) of the Act provides a broad rule-making power, which includes prescribing time limits. - The Court noted that Section 164(2) is couched in the most extensive terms and empowers the government to make rules for carrying out the provisions of the Act, including prescribing time limits. - The Court held that the time limit under Rule 117 is traceable to the rule-making power conferred by Section 164(2) and is not ultra-vires of the Act. The input tax credit under Section 140(1) is a concession, not a right, and can be regulated by placing a time limit. 2. Violation of Article 14 of the Constitution of India: - The Petitioner argued that the time limit under Rule 117 is arbitrary, unreasonable, and violative of Article 14, as it takes away the accrued right to input tax credit. - The Court emphasized that taxation issues are complex and economic legislations are based on experimentation. Courts should be cautious in interfering with such legislations unless they are plainly unjust or glaringly unconstitutional. - The Court found that the time limit under Rule 117 is not arbitrary or unreasonable. It is rooted in the larger public interest of having certainty in fiscal management and allocation of resources. - The Court concluded that the time limit stipulated under Rule 117 is neither unreasonable nor arbitrary and does not violate Article 14. 3. Meaning of 'technical difficulties' under Rule 117(1A) and the role of the IT Redressal Cell: - Rule 117(1A) allows for an extension of the time limit for filing TRAN-1 Form for those who faced technical difficulties on the common portal. - The IT Grievance Redressal Mechanism was set up to address issues faced by taxpayers due to technical difficulties. The mechanism involves examining system logs to determine if technical difficulties were encountered on the common portal. - The Petitioner argued that the phrase 'technical difficulties' should be broadly construed and that the GST Council cannot delegate its power to the IT Grievance Redressal Committee. - The Court held that the phrase 'technical difficulties' refers to difficulties on the common portal of GST. The system logs are a material piece of evidence to ascertain if technical difficulties were encountered. - The Court found that the criteria adopted by the IT Grievance Redressal Committee based on system logs are not arbitrary and are a correct criterion to determine technical difficulties. 4. Relief to the Petitioner: - The Petitioner claimed to have encountered technical difficulties while filing TRAN-1 Form and provided a screenshot of browsing history as proof. - The Respondents stated that no evidence of technical difficulties was found in the system logs on the common portal. - The Court held that the system logs are a cogent proof of technical difficulties on the common portal. In the absence of evidence from the system logs, no direction can be issued to treat the Petitioner as falling within the ambit of Rule 117(1A). - The Petition was dismissed, and no relief was granted to the Petitioner. Conclusion: - The time limit stipulated under Rule 117 is not ultra-vires of the Act and is in consonance with the transitional nature of the enactment. - The time limit is neither arbitrary nor unreasonable and does not violate Article 14. - The IT Grievance Redressal Mechanism and the criteria based on system logs are valid and not arbitrary. - No relief was granted to the Petitioner as no evidence of technical difficulties was found in the system logs.
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