2024 (7) TMI 1443 - HC - GST

Maintainability of petition - availability of alternative remedy - transitional credit - whether in the teeth of Section 140 of the GST Act, was there any bar or prohibition for filing return in the GST portal of Telangana where the petitioner s branch admittedly exists? - HELD THAT - Since it is a pure question of law, in view of judgment of the Supreme Court in M/s. Godrej Sara Lee Ltd. 2023 (2) TMI 64 - SUPREME COURT the petitioner is not relegated to avail the statutory alternative remedy. Justice Dipankar Datta in M/s. Godrej Sara Lee Ltd. 2023 (2) TMI 64 - SUPREME COURT , speaking for the Bench, poignantly held ' What follows from the said decisions is that where the controversy is a purely legal one and it does not involve disputed questions of fact but only questions of law, then it should be decided by the high court instead of dismissing the writ petition on the ground of an alternative remedy being available.' - it is deemed proper to entertain this petition and not throw the petition overboard for availing the alternative remedy. Section 140 (1) of the Act envisages that a registered person other than a person opting to pay taxes under Section 10 shall be entitled to take, in his electronic credit ledger, the amount of CENVAT credit. Undisputedly, the registration number/Permanent Account Number of the petitioner is same nationwide. Thus, sub-section (1) of Section 140 does not permit the respondents to arrive at a conclusion that the petitioner was obliged to file return electronically only in the GST portal of Maharashtra. Admittedly, the petitioner had registration under the existing law i.e., Service Tax Law and also got himself registered under the Act. The last proviso to sub-section (8) of Section 140 of the Act leaves no room for any doubt that the credit may be transferred to any of the registered person having same Permanent Account Number for which the centralised registration was obtained under the existing law. The filing of return in the GST portal of Telangana and transfer of credit is squarely covered and permissible under the last proviso to sub-section (8) of Section 140. The very foundation of show cause notice itself is bad in law and the assumption of respondent No. 2 that return could not have been filed in the GST portal of Telangana is not flowing from Section 140 of the Act. Therefore, the impugned action founded upon such notion is bad in law and deserves interference - Petition allowed.

Summary

Issues Involved:
1. Whether the petitioner bank could file its GST return in the Telangana portal due to a technical glitch in the Maharashtra portal.
2. Whether the petitioner bank can be saddled with demand, penalty, and interest under Section 140 of the GST Act, 2017.

Detailed Analysis:

Issue 1: Filing GST Return in Telangana Portal Due to Technical Glitch in Maharashtra Portal
The petitioner bank, headquartered in Maharashtra, faced a technical glitch while filing its GST return in the Maharashtra portal. Consequently, the bank filed its return in the Telangana portal, where it has a branch, and transferred the credit to the Maharashtra portal on the same day.

The petitioner argued that there is no prohibition under the GST Act for filing returns electronically in another state where the branch exists, especially when no undue benefit was derived, and the revenue did not suffer any loss. The petitioner supported this argument by referring to Section 140 (1) and (8) of the GST Act, 2017, which allows the transfer of credit to any registered person having the same Permanent Account Number.

The Revenue contended that the petitioner should have filed the return in the Maharashtra portal and approached higher authorities for redressal of the technical glitch. They argued that Section 140 mandates filing returns in the state where the registration exists.

The court found that the pivotal question was whether Section 140 of the GST Act barred filing returns in the Telangana portal. Since this was a pure question of law, the court decided to entertain the petition without relegating the petitioner to the statutory alternative remedy.

Issue 2: Demand, Penalty, and Interest Under Section 140 of the GST Act, 2017
The show-cause notice issued to the petitioner alleged that the credit availed through the TRAN-1 return filed in Telangana was ineligible and required reversal with applicable interest and penalty. The petitioner argued that the credit was transferred to the Maharashtra portal on the same day, and no undue benefit was derived.

The court examined Section 140 of the GST Act, particularly sub-sections (1) and (8). It found that the petitioner had centralised registration and the same Permanent Account Number nationwide. Thus, sub-section (1) did not restrict the petitioner to file returns only in Maharashtra. Sub-section (8) allowed the transfer of credit to any registered person having the same Permanent Account Number.

The court noted that the Revenue failed to establish any prohibition against filing returns in the Telangana portal where the petitioner's branch existed. It also found that the technical glitch in the Maharashtra portal was not disputed by the Revenue. The court emphasized that the Department cannot take advantage of its own wrong and held that the petitioner should not be penalized for filing returns in the Telangana portal due to a technical glitch in the Maharashtra portal.

Conclusion:
The court concluded that the foundation of the show-cause notice was flawed, as it assumed that returns could not be filed in the Telangana portal. Consequently, the court set aside the show-cause notice dated 03.09.2021 and the Order-in-Original dated 31.10.2023, allowing the writ petition without costs.