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2021 (6) TMI 108 - HC - GSTTransition of unutilized CENVAT credit - rectification of mistake in filing TRAN-1 form - HELD THAT - The taxpayers have filed the TRAN-1 Form within time, however on account of an inadvertent mistake on their part, incorrect details have been submitted via the TRAN-1 Form, and thus, they seek revision/rectification of their TRAN-1 Form. It is seen that since there is no effective mechanism provided for the revision/rectification of TRAN-1 Form, the Petitioners were forced to approach this Court under Article 226 of the Constitution. There is no dispute as to the fact that the Petitioners filed the TRAN-1 Form within the prescribed time, however, they were precluded from claiming their transitional credit on account of inadvertent error on their part due to filling in of wrong details or omissions. In the opinion of this Court, a genuine mistake should not result in the Petitioners losing out on their accumulated credit which is protected by Article 300A of the Constitution. The lack of an effective revisional mechanism would leave the taxpayers remediless, which, to our minds, could not be the intention of the law, and moreover, no provision was brought to our notice which extinguishes the said right of the taxpayer. For such reasons, the present set of cases are also allowed. All the petitions in the first, second and third batch are allowed - Respondents are directed to either re-open the online portal so as to enable the Petitioners to file TRAN-1 Form electronically, or to accept the same manually on or before 30th June, 2021.
Issues Involved:
1. Transition of CENVAT credit from the erstwhile indirect tax regime to the GST system. 2. Technical glitches and shortcomings in the online system preventing timely filing of TRAN-1 Form. 3. Legal validity of the time period prescribed under Rule 117 of CGST Rules for filing TRAN-1 Form. 4. Petitioners’ rights to claim transitional credit and challenges faced in the procedural aspects. 5. Absence of a mechanism for revision/rectification of TRAN-1 Form. Detailed Analysis: I. Transition of CENVAT credit from the erstwhile indirect tax regime to the GST system: The judgment addresses the transition of unutilized CENVAT credit from the previous tax regime to the GST system as per Chapter XX of the CGST Act, 2017. The Act mandates filing the TRAN-1 Form by 27th December 2017, to claim such credit. However, numerous taxpayers faced difficulties in filing the form due to technical issues, leading to blocked filings post the deadline. II. Technical glitches and shortcomings in the online system preventing timely filing of TRAN-1 Form: Taxpayers encountered various technological hindrances, including poor internet bandwidth and system failures, which prevented them from filing the TRAN-1 Form by the deadline. The Government acknowledged these issues and set up the IT Grievance Redressal Committee (ITGRC) to address such problems. Rules 117(1A) and 120A were incorporated to extend the filing deadline for affected taxpayers. III. Legal validity of the time period prescribed under Rule 117 of CGST Rules for filing TRAN-1 Form: The court examined whether the time period under Rule 117 was directory or mandatory and concluded it to be directory. The irrationality of Rule 117(1A), which applied only to a specific class of persons facing technical difficulties, was also discussed. The court emphasized that the unutilized input tax credit is a vested right under Article 300A of the Constitution of India, which cannot be taken away due to technical grounds. IV. Petitioners’ rights to claim transitional credit and challenges faced in the procedural aspects: The petitions were categorized into three batches based on common issues: First Batch: Petitioners with evidence of attempts to file TRAN-1 Form before the deadline. - The court recognized the genuine attempts made by these taxpayers and the technical issues faced. It directed the respondents to either reopen the online portal or accept manual filing of the TRAN-1 Form. Second Batch: Petitioners without proof of attempts to file TRAN-1 Form. - Despite the lack of evidence, the court granted relief based on previous decisions where similarly placed taxpayers were allowed to file TRAN-1 Form. The court emphasized that many taxpayers might not have preserved evidence of their attempts due to lack of technical know-how. Third Batch: Petitioners who filed TRAN-1 Form within the prescribed time but sought revision/rectification. - The court acknowledged the inadvertent errors made by these taxpayers and the absence of a mechanism for rectification. It held that genuine mistakes should not result in the loss of accumulated credit protected under Article 300A of the Constitution. V. Absence of a mechanism for revision/rectification of TRAN-1 Form: The court noted that the lack of an effective mechanism for revising TRAN-1 Form left taxpayers remediless. It directed the respondents to provide a facility for rectification of bona fide errors, ensuring that taxpayers do not lose their accumulated credit. Conclusion and Directions: The petitions in all three batches were allowed. The court directed the respondents to either reopen the online portal for filing TRAN-1 Form or accept manual submissions by 30th June 2021. The respondents were instructed to process the claims in accordance with the law once the forms were filed.
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