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2025 (4) TMI 678 - HC - GSTRejection of transitional credit - whether the appellant/writ petitioner had voluntarily applied for registration in terms of Rule 8 of CGST Rules 2017? - HELD THAT - This appears to be not voluntary act of the appellant/writ petitioner but pursuant to certain direction given by the CBEC helpdesk. The appellant sent an email dated 27th June 2017 to the CBEC helpdesk requesting to reissue a provisional ID for GST migration. The appellant/writ petitioner had enclosed the screenshot of ST-2 to show that there was technical breach in obtaining the provisional ID for GST migration. The helpdesk in reply sent an email dated 16th August 2017 while recording the stand taken by the appellant that they did not receive the provisional ID and password to migrate to the GST and they advised to apply for new registration on the GST Common Portal. Thus pursuant to such advice rendered by the CBEC helpdesk vide email dated 16th August 2017 the appellant/writ petitioner had applied for a new registration on the GST Common Portal therefore the said application cannot be stated to be a voluntary application but pursuant to the direction issued by the helpdesk. Therefore the appellant cannot be non-suited of the said ground. The claim made by the appellant/writ petitioner for transitional credit has to be reconsidered bearing in mind that the application made by the appellant/writ petitioner for new registration was not voluntary but pursuant to the direction issued by the CBEC helpdesk. Conclusion - The appellant s application for new GST registration is not a voluntary act but is pursuant to the CBEC helpdesk s direction. The impugned order dated 7th February 2023 is set aside and the matter is remanded back to the Respondent No.1 Deputy Commissioner of Revenue State Tax Ballygunge to consider the application filed by the appellant/writ petitioner afresh bearing in mind the observations made in the preceding paragraphs which are to the effect that the application filed by the appellant/writ petitioner for new GST registration was not voluntary but on the direction issued by the department - Appeal allowed by way of remand.
ISSUES PRESENTED and CONSIDERED
The core legal question considered in this judgment is whether the appellant's application for new GST registration was voluntary or was pursuant to a direction from the CBEC helpdesk, and consequently, whether the rejection of the appellant's claim for transitional credit was justified. ISSUE-WISE DETAILED ANALYSIS Relevant Legal Framework and Precedents The legal framework involves the Central Goods and Services Tax (CGST) Rules, 2017, specifically Rule 8, which pertains to the procedure for obtaining new GST registration. The appellant's claim for transitional credit was rejected based on the assertion that the appellant voluntarily applied for new registration instead of transitioning from the existing law to the present law on the appointed day, July 1, 2017. Court's Interpretation and Reasoning The Court examined the circumstances under which the appellant applied for new GST registration. The appellant argued that the application was not voluntary but was made following advice from the CBEC helpdesk. The Court noted that the appellant had communicated with the CBEC helpdesk, highlighting technical difficulties in obtaining the provisional ID for GST migration. The helpdesk's response suggested applying for new registration, which the appellant followed. The Court interpreted this as a directive rather than a voluntary action by the appellant. Key Evidence and Findings The appellant provided evidence of an email dated June 27, 2017, sent to the CBEC helpdesk, requesting reissuance of a provisional ID for GST migration. The helpdesk responded on August 16, 2017, advising the appellant to apply for new registration on the GST Common Portal due to the non-receipt of the provisional ID and password. The Court found this correspondence crucial in determining that the appellant's application for new registration was not voluntary. Application of Law to Facts The application of Rule 8 of the CGST Rules, 2017, was central to the issue. The Court applied the rule in the context of the appellant's situation, considering the advice from the CBEC helpdesk as a significant factor. The Court concluded that the appellant's action of applying for new registration was not voluntary but was a result of the helpdesk's direction, thus impacting the legitimacy of the rejection of transitional credit. Treatment of Competing Arguments The appellant argued that the rejection of transitional credit was unjust due to the circumstances surrounding the new registration application. The respondent's position was that the appellant voluntarily applied for new registration, thus forfeiting the transitional credit. The Court favored the appellant's argument, emphasizing the role of the CBEC helpdesk's advice in the appellant's decision-making process. Conclusions The Court concluded that the rejection of the appellant's transitional credit claim was unjust, given that the application for new registration was not voluntary but was made following the CBEC helpdesk's advice. The Court determined that the matter required reconsideration by the Deputy Commissioner of Revenue, State Tax, Ballygunge. SIGNIFICANT HOLDINGS The Court set aside the impugned order dated February 7, 2023, and remanded the matter for reconsideration, emphasizing that the application for new GST registration was not voluntary. The Court directed that the appellant's claim for transitional credit be reconsidered, taking into account the observations made regarding the non-voluntary nature of the registration application. Core Principles Established The judgment establishes that when an application for new GST registration is made based on advice or direction from an authoritative body such as the CBEC helpdesk, it should not be considered voluntary. Consequently, such circumstances should be taken into account when assessing claims for transitional credit. Final Determinations on Each Issue The Court determined that the appellant's application for new GST registration was not a voluntary act but was pursuant to the CBEC helpdesk's direction. As a result, the rejection of the transitional credit claim was deemed unjust, and the matter was remanded for fresh consideration with instructions to provide a personal hearing to the appellant.
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