2021 (11) TMI 687 - HC - GST

Filing of Form Tran-1 - vires of sub-rule 1(A) to Rule 117 of CGST Rules - N/N. 48/2018 CT dated 10.09.2018 - restriction on extension of time limit only to those registered persons in respect of whom Council has made recommendation - Circular No.No.39/13/2018 dated 03.04.2018 - HELD THAT - This Court has categorically came to the conclusion that the CGST provisions more particularly relating to filing and uploading of Forms is a transitory provision and on account of the same, a beneficial treatment has to be extended to the assesse so as to permit the assessee to make his filings and obtain any input credit if so entitled. Though the allegations and counter allegations have been made as regards uploading or non-uploading, ability to upload and inability to upload, the fact remains that, what is sought to be uploaded are relating to transactions which occurred prior to 27.12.2017 which are evidenced by records including transactions carried out through normal banking channels. It is these transactions which have already occurred prior to the introduction of GST regime which are sought to be filed by uploading the Form in Tran- 1. More so because there is a new procedure which has been prescribed and new methodology which has been adopted for the assessment etc., an assessee cannot be deprived of any input credit that he may be entitled to only on account of non-uploading of a particular form - If the assessee is deprived of benefits on such technical grounds, there would be no purpose in having the tax system, which would result in the assessee trying to evade taxes. There would be no requirement for issuance of Certiorari to quash Sub-Rule 1A to Rule 117 of CGST or Rule 17 inserted by notification No.48 or the circulars issued as sought for - A mandamus is issued directing the respondent authorities to open the portal to enable the petitioner to upload the necessary forms, if the portal cannot be opened to permit the assesse to file hard copies of the said form and act thereon.

Summary

Issues:
Petitioner seeks writs to strike down various provisions of CGST Rules and Circulars, requesting for revision filing of TRAN-1, extension of time limit, and another opportunity to file Form TRAN 1. Respondents contest the petitioner's claims, arguing against the need for revision and lack of evidence of attempted filing. Court examines the legality of the rules and circulars in light of the transitional nature of the GST regime and the rights of the petitioners to carry forward unutilized credit.

Analysis:
The petitioner requested writs to challenge specific provisions of CGST Rules and Circulars, including the term 'technical difficulties on the common portal' in Rule 117, imposition of conditions for compliance, and the authority to prescribe time limits. The Court analyzed the legality of these provisions in relation to Section 140 of the CGST Act, emphasizing the transitional nature of the GST regime and the importance of not denying legitimate rights based on technicalities. The Court found in favor of the petitioners, allowing the extension of the time limit under Rule 117 and directing respondents to permit filing/revision of TRAN-1 by a specified date.

The Court highlighted the distinction between registered persons who failed to file TRAN-1 by the deadline and those who uploaded with errors intending to revise. It emphasized the absence of a specific time limit for revision filing under Section 140 of the Act and the introduction of Rules allowing for such revisions. The Court rejected arguments against permitting revision filing, citing the need to uphold the petitioners' rights to carry forward unutilized credit and the flexibility provided by Section 172 for addressing difficulties in implementing the Act.

In response to the appeal filed against the initial decision, the Division Bench confirmed the ruling, emphasizing the transitional nature of the CGST provisions and the need for a beneficial approach towards taxpayers to facilitate filings and credit claims. The Court underscored the importance of providing adequate opportunities to taxpayers to comply with the new procedures and obtain entitled benefits, warning against depriving assesses of benefits on technical grounds that could lead to tax evasion.

The Court concluded that the petitioner's request for an opportunity to upload TRAN-1 forms for transactions predating the GST regime should be granted, emphasizing that the filing itself does not automatically entitle the assessee to credit but is subject to scrutiny. The Court issued a Certiorari to quash the decision denying another opportunity to file TRAN-1 and a Mandamus directing the authorities to enable the petitioner to upload necessary forms or submit hard copies for processing, with a reminder that authorities have the power to verify the details provided.