2020 (8) TMI 732 - HC - GST

Claim of transitional credit - submission of form TRAN-1 - mistake while submitting the aforementioned form TRANS-1 was that, instead of filing it under the Central GST, it was filed under the State GST. Petitioner was not aware of such indication - HELD THAT - While exercising the powers of judicial review under Article 226 of the Constitution of India, it would not be in the domain of this court to decide as to whether it is a normal credit or was an intentional or bonafide error. Since petitioner has already sought rectification vide request, Ext.P5 in W.P.(C)No.12930 of 2020 and Ext.P3 in other items, I am of the view that the 4th respondent has already received such request on consideration of the matter, in case it requires the petitioner or representative, take a call and thereafter, as per the circular and the procedure invoked, would send it to SGST network. The SGST network on consideration of the matter would take a call on such request by applying the principles of natural justice, i.e. affording an opportunity of hearing to the petitioner and thereafter would strictly adhere the procedure prescribed in the circular for onward transition to ITGRC. Let the entire exercise be undertaken within a period of six months. If at all the department had sent earlier notice, it would have definitely referred to while raising a summary of show cause notice including the demand any therein - Since the petitioners have already submitted the request, the procedure as directed to be followed by respondents in other matters, the conditions contained therein would also apply in the present case. Until such time a decision is taken, the operation of show cause notice is ordered to be kept in abeyance. Petition disposed off.

Summary

Issues:
1. Incorrect filing of GST forms under State GST instead of Central GST.
2. Request for rectification or revision of the mistake.
3. Dispute regarding the period of limitation for seeking revision.
4. Interpretation of provisions under Rule 117 and Rule 120A of the CGST Act.
5. Alleged irregular availing of transitional credit under Rule 117(4)(a).
6. Compliance with principles of natural justice in issuing show cause notice.
7. Adherence to the procedure for rectification as directed by the court.

Issue 1: Incorrect filing of GST forms under State GST instead of Central GST

The petitioner mistakenly filed form TRAN-1 under State GST instead of Central GST, leading to a notice from the State GST Department highlighting the error. The petitioner claimed transitional credit under State GST for stock without referencing CGST. The Accountant General's objection was based on the lack of documentation supporting the claimed credit under Central Excise, thus necessitating a reply or facing a notice under Section 73(1) of the CGST Act.

Issue 2: Request for rectification or revision of the mistake

The petitioner sought rectification through a request under Rule 120A, contending that the revision should not be time-barred as per the amended provisions of Rule 117A. Reference was made to a Division Bench judgment permitting revisions due to difficulties faced during the GST transition period. The court emphasized the need for rectification and directed the process to be completed within six months.

Issue 3: Dispute regarding the period of limitation for seeking revision

The Central Board for Indirect Taxes and Customs argued against the revision of form TRAN-2 due to the expiration of the 190-day period specified in Rule 117. It was contended that the error did not fall under the category of rectification and that the petitioner should seek a refund under the CGST provisions instead of revision.

Issue 4: Interpretation of provisions under Rule 117 and Rule 120A of the CGST Act

The court analyzed the provisions of Rule 117 and Rule 120A, emphasizing the need for rectification of errors in GST forms. The judgment highlighted the importance of understanding the correct provisions under CGST for claiming transitional credit and the necessity of following the prescribed procedures for rectification.

Issue 5: Alleged irregular availing of transitional credit under Rule 117(4)(a)

The respondents contended that the petitioner irregularly availed transitional credit under Rule 117(4)(a) by not adhering to the correct provisions of CGST. They argued for the refund of the credit along with interest under the Act, emphasizing the need for compliance with the correct GST provisions.

Issue 6: Compliance with principles of natural justice in issuing show cause notice

Concerns were raised regarding the lack of adherence to the principles of natural justice in the issuance of a show cause notice demanding the reversal of credit and interest. The court directed the respondents to follow the proper procedure, afford an opportunity for a hearing, and strictly adhere to the circular for processing rectification requests.

Issue 7: Adherence to the procedure for rectification as directed by the court

The court ordered the respondents to follow the procedure outlined for rectification as directed in other cases, keeping the operation of the show cause notice in abeyance until a decision was made. The respondents were instructed to comply with the principles of natural justice and allow the petitioner to raise legal arguments as deemed necessary. The writ petitions were disposed of accordingly.