2020 (8) TMI 209 - HC - GST

Vires of Rule 117 of the Central Goods and Service Tax Rules, 2017 - time limitation - transitional credit - Circular bearing No.39/13/2018-GST in F.No.267/7/2018-CX.8 - HELD THAT - The requirement for an assessee to establish technical difficulty as expressed in Circular dated 03.04.2018, is reiterated in the provision. I am however, unable to understand as to how the assessee would have anticipated this requirement in order that it collects proof by way of screen shots and otherwise establish the factum of technical glitches. Though Goods and Service Tax has been introduced to streamline multiple revenue enactments, the mass of litigation that Rule 117 has generated, has defeated the very object and purpose of the enactment. Transition, by itself, does not vest any right in the assessee. It is only utilisation of credit that does, and such utilisation is subject to verification and assessment by an Assessing Officer. It is thus vital that the distinction between transition of a credit and utilisation of such credit after verification by an Officer is taken note of in the proper perspective. The exchange of communications between 28.12.2017 and 01.01.2020 reveal that the petitioner has been diligent in making efforts to open the portal and upload the forms and the respondents are directed to do the needful forthwith to enable the petitioner to upload the requisite forms.

Summary

Issues:
1. Transition of unutilized credits under Service Tax/VAT/CST regimes to Goods and Service Tax Act.
2. Challenges faced by the petitioner in uploading required forms due to technical glitches.
3. Circular issued by the Central Board of Indirect Taxes and Customs regarding IT Grievance Redressal Mechanism.
4. Amendment of Rule 117 extending the due date for uploading declaration forms.
5. Requirement for assessee to establish technical difficulties for extension of due date.
6. Interpretation of the distinction between transition of credit and utilization after verification.
7. Legal precedents supporting relief for similar cases.
8. Petitioner's efforts to comply with uploading requirements and direction to respondents for assistance.

Analysis:

1. The petitioner, a registered entity under previous tax regimes, had unutilized credits that needed to be transitioned to the Goods and Service Tax Act. The due date for this transition was specified under Rule 117 of the CGST Rules, with various difficulties reported in accessing the portal and uploading the necessary forms.

2. Despite regular monthly returns, the petitioner faced challenges in carrying forward the credit due to non-uploading of the required TRAN-1 form on time. A circular issued by the Central Board of Indirect Taxes and Customs acknowledged technical glitches on the GST Portal and established an IT Grievance Redressal Mechanism to address such issues.

3. The Circular placed the responsibility on the assessee to prove technical glitches, a requirement not present in the Act before 03.04.2018. Subsequent amendments to Rule 117 extended the due date for form submission, emphasizing the need for the assessee to demonstrate technical difficulties for deadline extensions.

4. The judgment highlighted the importance of differentiating between the transition of credit and its utilization, emphasizing that utilization is subject to verification by an Assessing Officer. The mass litigation arising from Rule 117 was noted to have undermined the intended purpose of the enactment.

5. Citing legal precedents from other High Courts, the judgment granted relief to the petitioner based on diligent efforts to comply with uploading requirements. The respondents were directed to facilitate the uploading of necessary forms without imposing costs on the petitioner.

This comprehensive analysis of the judgment addresses the key issues involved and provides a detailed understanding of the legal intricacies and decisions made by the court.