Vires of Time Limit Prescribed in Rule 117 of CGST Rules 2017 - GST TRANS-1 Form

[Rachit Agarwal]

Vires of Time Limit prescribed in Rule 117 of CGST Rules, 2017 and Retrospective Amendment in Section 140 of CGST Act, 2017

Hon’ble Madras High Court in case of  M/S. P.R. MANI ELECTRONICS VERSUS UNION OF INDIA, THE GOODS AND SERVICE TAX COUNCIL, THE PRINCIPAL CHIEF COMMISSIONER OF GST & CENTRAL EXCISE, THE ASSISTANT COMMISSIONER OF GST & CENTRAL EXCISE [2020 (7) TMI 443 - MADRAS HIGH COURT] pronounced on 13.07.2020

Petitioner Plea

The prescription of such time limit in Rule 117 is ultra vires Section 140 and violates Article 14 and 300-A of the Constitution of India in as much as it deprives the Petitioner of its property by way of ITC.

Respondent Plea

ITC is in the nature of a concession granted to registered persons and, therefore any conditions, including time limits, subject to which such concessions are granted should be enforced strictly.

Hon’ble Court Order

1. In light of the judgment of the Supreme Court in Jayam & Co. Versus Assistant Commissioner & Anr. - 2016 (9) TMI 408 - Supreme Court, the contention of the learned counsel for the Petitioner to the effect that ITC is the property of the Petitioner cannot be countenanced and ITC has to be construed as a concession. [Para 17]

2. The case for a time limit is compelling and disregarding the time limit and permitting a party to avail Transitional ITC, in perpetuity, would render the provision unworkable. [Para 17]

3. We concur with the conclusion of the Bombay High Court in Nelco Limited Versus The Union of India, The Central Board of Indirect Taxes and Customs, The State of Maharashtra, The Goods and Services Tax Council, The Commissioner of State Tax - 2020 (3) TMI 1087 - BOMBAY HIGH COURT that both ITC and Transitional ITC cannot be availed of except within the stipulated time limit. [Para 17]

4. It is not a logical corollary thereof that time limits for availing ITC and, in particular, Transitional ITC, are inimical to the object and purpose of the statute.

5. Time limit relating to the availing of a concession or benefit.

If construed as mandatory, the substantive rights of the assessees would be impacted; equally,

If construed as directory, it would adversely impact the Government's revenue interest, including the predictability thereof.

On weighing all the relevant factors, which may be not be conclusive in isolation, in the balance, we conclude that the time limit is mandatory and not directory.

6. Petitioner has completely failed to make out a case to direct the Respondents to permit the Petitioner to file Form GST TRAN -1 and claim the Transitional ITC of ₹ 4,70,008/-.
7. The writ petition is dismissed