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2020 (10) TMI 1217 - HC - GSTTransitional Credit - submission of declaration in Form GST TRAN-1 on 27th December, 2017 in time - vires of Articles 14, 265 and 300-A of the Constitution of India - HELD THAT - In this case, we are not examining the issue whether the Petitioner is entitled to VAT tax credit as claimed by the Petitioner which will be examined by the authorities. What we are concerned with is that despite the admitted successful filing of Form TRAN-1 by the Petitioner on 27th December, 2017, the request of the Petitioner for transitioning of credit has not been approved by the ITGRC merely on the basis that there were no technical glitches on the GSTN side. There is no further explanation or clarification or evidence on the issue by the Respondents. Even the learned Sr. Counsel for the Respondents has only reiterated this stand during his submission. The whole objective of digitization is to convenience the tax payers and not to harass them. We are conscious that the GST system is still evolving in its implementation. We are of the view that merely because there were no technical glitches in the GSTN with respect to the Petitioner s TRAN-1 which was admittedly filed in time, the claim of the Petitioner, if it was otherwise eligible in law, cannot be rejected for no apparent fault on the part of the Petitioner. This cannot be the objective of the GST system or digitisation. Such a situation cannot be countenanced as it would be wholly unfair and unjust - this is a fit case for invocation of our writ jurisdiction. The Respondents are directed to consider the case of the Petitioner and after looking into the merits of the claim and physically or otherwise verifying the amount of VAT as claimed by the Petitioner take such actions as may be necessary for transitioning the credit of such amount into the Petitioner s credit ledger/ electronic credit ledger within four weeks from the date of this order.
Issues Involved:
1. Denial of transitioning the credit of ?17,07,673/- after the submission of Form GST TRAN-1. 2. Violation of Articles 14, 265, and 300-A of the Constitution of India. 3. Technical glitches in the GSTN portal. 4. Vested rights to transition tax credit. 5. Jurisdiction and applicability of judicial precedents. Detailed Analysis: 1. Denial of transitioning the credit of ?17,07,673/- after the submission of Form GST TRAN-1: The Petitioner filed Form GST TRAN-1 on 27th December 2017 for transitioning credit of ?17,07,673/-. Despite successful filing, the credit was not reflected in the electronic credit ledger. The Petitioner argued that this failure was due to technical glitches in the GSTN portal, which prevented the transition of the credit. 2. Violation of Articles 14, 265, and 300-A of the Constitution of India: The Petitioner challenged the Respondents' action as violative of Articles 14 (right to equality), 265 (taxation only by authority of law), and 300-A (right to property) of the Constitution of India. The Petitioner sought a Writ of Mandamus directing the Respondents to transition the credit into the Petitioner’s electronic credit ledger or allow manual resubmission. 3. Technical glitches in the GSTN portal: The Petitioner submitted that the failure to transition the credit was due to technical glitches in the GSTN portal. Despite raising queries and corresponding with the GST Help Desk and other authorities, the issue remained unresolved. The Petitioner faced similar issues in Delhi and Haryana, where the portal was reopened for filing Form GST TRAN-1 upon grievances raised. 4. Vested rights to transition tax credit: The Petitioner argued that once the Form GST TRAN-1 was filed within the prescribed time, a vested right to transition the credit accrued, which could not be taken away due to technical lapses not attributable to the Petitioner. The Petitioner relied on the Delhi High Court's decision in Bhargava Motors v/s. UOI and the Punjab & Haryana High Court's decision in Adfert Technologies Pvt. Ltd., v/s. Union of India, which recognized unutilized credit as a vested right. 5. Jurisdiction and applicability of judicial precedents: The Respondents argued that the Petitioner’s case was not approved by the ITGRC as no technical errors were found. They relied on the decision of the Bombay High Court in NELCO Limited v/s. Union of India, which held that unless there was a technical glitch from the GSTN side, the portal could not be reopened. The Respondents contended that CENVAT Credit/ Input Tax Credit/ VAT Credit is not a vested right but a mere concession. Judgment: The Court noted that it was undisputed that the Petitioner’s Form GST TRAN-1 filing on 27th December 2017 was successful, but the credit was not reflected in the electronic credit ledger. The Court distinguished the facts of this case from NELCO, where the Petitioner had failed to file the form due to portal issues. Here, the form was successfully filed, but the credit was not transitioned. The Court emphasized that the objective of digitization is to convenience taxpayers, not to harass them. The Court held that merely because there were no technical glitches on the GSTN side, the Petitioner’s claim could not be rejected if it was otherwise eligible in law. The Court found this situation unfair and unjust, warranting the invocation of its writ jurisdiction. Order: The Court directed the Respondents to consider the Petitioner’s case on its merits and take necessary actions to transition the credit into the Petitioner’s electronic credit ledger within four weeks. The Court clarified that it had not examined the merits of the Petitioner’s claim to VAT credit. The Petition was allowed, with no order as to costs.
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