2020 (10) TMI 463 - HC - GST

Filing of Form Trans 1 in order to avail the unutilized credit - transitional credit - case of Revenue is that since the time line for submitting these forms were not maintained by the Assessee, and no such evidence was produced by them, the benefit of credit cannot be availed, and submitting of manual declaration in Tran-1, as done with the communication dated 6 February 2018, cannot be accepted - HELD THAT - The Assessee had been making bona fide efforts to upload his declaration Form Tran 1. However, having faced technical glitches in the same, he was not only redirected to the help desk of the GST Department in the first communication dated 28 December 2017, where his request was registered as ID No.20171228912950, but the same does not appear to have been responded at all. Instead of solving the problem of their own infrastructure and technical glitches, the authorities created all kinds of problems by remaining a silent spectator and making the Assessee to run from pillar to post, against the clear intention of the Government to allow credit of the un-utilized input credit under the earlier tax regime and the input service tax and excise duty to be set off under the new GST regime, to which a switch over was made with a big aplomb on 1.7.2017 by the Central Government. The authorities should have acted in aid of this clear and unambiguous intention of the Government. But however, what they did was just the opposite of it, by not even accepting the manual submission of the said form Tran-1 by the Assessee, or by not extending the date suitably, once the portal could be accessed by the Assessee. The order of the learned Single Judge was a straight, correct and innocuous order. Instead of complying with the same, the Department is seeking to raise all kinds of technical and hyper technical pleas before us in the present intra-court appeal. We strongly deprecate such practices of the Revenue Authorities in wasting the time of the court as well as wasting the resources of the State in filing such frivolous litigation. Therefore, we are inclined to impose cost on all the Appellants herein. The present Appeal of Revenue is accordingly dismissed with a token cost of ₹ 15,000/-.

Summary

Issues Involved:
1. Technical difficulties in uploading Form Tran-1 for availing unutilized credit under the new GST regime.
2. Requirement of evidence for technical glitches as per Circular dated 03.04.2018.
3. Distinction between transition of credit and its utilization.
4. Frivolous litigation by the Revenue Department.

Issue-wise Detailed Analysis:

1. Technical difficulties in uploading Form Tran-1:
The Assessee faced difficulties in uploading Form Tran-1 to avail unutilized credit under the new GST regime. Despite multiple attempts and communications with the GST helpdesk, the Assessee could not file the form due to technical glitches. The Department's initial response redirected the Assessee to the GSTN helpdesk, but the issue remained unresolved. The Assessee then submitted a manual Tran-1 form to the local GST authority, which was not accepted.

2. Requirement of evidence for technical glitches:
The learned Single Judge noted that the requirement for an Assessee to establish technical difficulty, as per Circular dated 03.04.2018, was unreasonable. The Judge questioned how the Assessee could have anticipated the need to collect proof of technical glitches. The Assessee's diligent efforts to file the form and subsequent communications with the Department were acknowledged, but the Department rejected the Assessee's request due to the lack of evidence of technical glitches.

3. Distinction between transition of credit and its utilization:
The learned Single Judge emphasized that the transition of credit does not vest any right in the Assessee. It is the utilization of credit, subject to verification and assessment by an Assessing Officer, that matters. The Judge highlighted the importance of distinguishing between the transition and utilization of credit.

4. Frivolous litigation by the Revenue Department:
The High Court criticized the Revenue Department for filing a frivolous appeal against the innocuous order of the learned Single Judge. The Court observed that the Department's actions were a sheer waste of time and resources. The Assessee's bona fide efforts to upload the Tran-1 form were evident, and the Department's failure to resolve the technical issues was noted. The Court strongly deprecated the Department's practice of raising technical and hyper-technical pleas, which contradicted the Government's clear intention to allow credit of unutilized input credit under the new GST regime.

Conclusion:
The High Court dismissed the Revenue's appeal, imposed a cost of ?15,000 on the Appellants, and directed that the Assessee be allowed to avail the due benefit of input credit of stocks as on 1.7.2017, either by accepting the offline copy of Form Tran-1 or by allowing resubmission on the E-portal. The Court emphasized the need for the Department to act in aid of the Government's intention and avoid wasting judicial resources on frivolous litigation.