2020 (9) TMI 584 - HC - GST

Permission to file Form TRAN-1 - transitional credit - transition of GST regime - CGST Act - validity of Rule 117 of the CGST Rules - HELD THAT - The controversy involved in the present writ petitions is similar to the controversy involved in OBELISK COMPOSITE TECHNOLOGY LLP, VERSUS UNION OF INDIA, THE SECRETARY TO THE GOVT. OF INDIA, DEPARTMENT OF REVENUE, MINISTRY OF FINANCE 2019 (12) TMI 1162 - RAJASTHAN HIGH COURT where it was held that The challenge to the constitutional validity of Rule 117 no more being res integra, this Court cannot entertain such prayer and accordingly reject the same, however, considering the fact that the Union of India and the Finance Department have extended the period contemplated under Rule 1A of Rule 117 till 31st December, 2019, we grant liberty to the petitioner to make an application before GST Council (through Standing Counsel, who is further requested to hand over the same to the jurisdictional officer) for forwarding the same to the GST Council to issue requisite certificate of recommendation alongwith requisite particulars. Thus, liberty granted to the petitioners to make an application before GST Council through Standing Counsel, who is further requested to hand over the same to the jurisdictional officer for forwarding the same to the GST Council to issue requisite certificate of recommendation alongwith requisite particulars, evidence and a certified copy of the order instantly and such decision be taken forthwith and if the petitioners assertion is found to be correct, the GST Council shall issue necessary recommendation to the Commissioner to enable the petitioners to get the benefit of CENVAT credit within the stipulated time as stipulated by the Union of India. Petition disposed off.

Summary

Issues Involved:
1. Petitioners seeking permission to file Form TRAN-1 under CGST Act for availing Transitional Credit in Electronic Credit Ledger.
2. Challenge to the validity of Rule 117 of the CGST Rules.

Analysis:

Issue 1: Petitioners seeking permission to file Form TRAN-1 for Transitional Credit
The petitioners in the writ petitions requested permission to file Form TRAN-1 under the Central Goods and Services Tax Act, 2017 (CGST Act) to avail Transitional Credit in their Electronic Credit Ledger. They also sought the respondents to give effect to the manually submitted Form GST Tran-1 to avail legitimate Input Tax Credit. The judgment in Obelisk Composite Technology LLP case was referred, where similar prayers were made. The Co-ordinate Division Bench had disposed of the case, granting liberty to make an application before the GST Council through Standing Counsel for necessary recommendations and benefits within the stipulated time.

Issue 2: Challenge to the validity of Rule 117 of the CGST Rules
The validity of Rule 117 of the CGST Rules was challenged in both writ petitions. The petitioners sought a declaration that Rule 117 violates Constitutional provisions and requested it to be set aside or read down without a last date to file TRANS-1. The judgment in Obelisk Composite Technology LLP case highlighted a similar challenge where the Division Bench referred to a decision by the Gujarat High Court and dismissed challenges to the constitutional validity of Section 140(3) of the CGST Act and the proviso to Rule 117. The Court in the present case rejected the challenge to the constitutional validity of Rule 117, citing previous decisions, but granted liberty to the petitioners to apply before the GST Council for necessary recommendations within the extended deadline.

In conclusion, the High Court disposed of the writ petitions in line with the decision in the Obelisk Composite Technology LLP case, allowing the petitioners to seek recommendations from the GST Council through the Standing Counsel for availing benefits within the specified deadline. The challenges to the constitutional validity of Rule 117 were not entertained, based on previous judgments, but the petitioners were granted the opportunity to pursue their claims through the prescribed procedure.