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2020 (11) TMI 235 - HC - GSTVires of Rule 117 and Rule 118 of the Central Goods and Service Tax Rules, 2017 - Input Tax Credit - Petitioner submits that since the Petitioner has not received any clarity from the Respondents with regard to the carry forward of the CENVAT credit in respect of its application, it has been left with no option but to file the present Petition as a result of the hardship caused to the Petitioner - HELD THAT - This is a case, where admittedly Petitioner could not file GST TRAN-1 on or before 27.12.2017 but had manually applied for GST TRAN-1 on 7.5.2018 as per Circular dated 03.04.2018 within the timeline as per the date extended by this Court. Also admittedly the Respondents have found the Petitioner to be eligible for credit amounting to ₹ 78,62,466/-. But the credit for the same has been denied as the ITGRC found that the Petitioner has not tried to save or submit or file TRAN-1 before 27.12.2017 - We are informed by the learned counsel for the Petitioner which is not controverted by the learned Sr. counsel for the Respondents that this information of rejection of the Petitioner s application for manual GST TRAN-1 has not been communicated to the Petitioner despite several reminders/ communications from the Petitioner and it is only by way of the affidavit in reply filed to this Petition that the Petitioner has become aware of the rejection. As admittedly in this case the Respondents have found the Petitioner to be eligible for input credit amounting to ₹ 78,62,466/-, in our view the finding of the ITGRC would in the face of the admission by the Respondents to the amount of credit, would be a mere technicality which cannot come in the way of substantial justice - Respondents are directed to accept the TRAN-1 filed by the Petitioner and to give the due of input tax credit of ₹ 78,62,466/- in the electronic credit ledger/input tax credit of the Petitioner within two weeks from the date of this order. It is not considered necessary to examine the Petitioner s challenge to the vires of Rules 117 and 118 of the Central Goods and Services Tax Rules, 2017 - petition allowed - decided in favor of petitioner.
Issues Involved:
1. Inaction by Respondent authorities in granting Input Tax Credit (ITC) to the Petitioner. 2. Challenge to the vires of Rule 117 and Rule 118 of the Central Goods and Services Tax Rules, 2017. 3. Request for directions to allow filing of TRAN-1 electronically or manually. 4. Eligibility for ITC amounting to ?78,62,466/-. Issue-wise Detailed Analysis: 1. Inaction by Respondent Authorities in Granting Input Tax Credit (ITC): The Petitioner, a private limited company engaged in real estate, was registered under the Maharashtra Value Added Tax Act, 2002, and the Central Goods and Services Tax Act, 2017. The Petitioner sought to carry forward ITC amounting to ?79,44,237.61/- as per Section 140 of the CGST Act read with Rule 117 of the CGST Rules. Despite filing the necessary forms and providing required documentation, the Petitioner faced technical difficulties in filing TRAN-1 electronically by the stipulated deadline of 27.12.2017. The Petitioner made several attempts to resolve the issue, including submitting a manual TRAN-1 form and corresponding with Respondents, but did not receive the ITC due. The Respondents acknowledged the eligibility for ITC but denied it on technical grounds, stating that the Petitioner had not attempted to save, submit, or file TRAN-1 electronically. 2. Challenge to the Vires of Rule 117 and Rule 118 of the Central Goods and Services Tax Rules, 2017: The Petitioner challenged the vires of Rule 117 and Rule 118 of the CGST Rules, 2017, arguing that these rules were ultra vires Sections 140(1), 140(3), and Section 9 of the CGST Act, 2017, and various Articles of the Constitution of India. The Petitioner contended that these rules were beyond the legislative competence of Parliament under Article 269-A of the Constitution. However, the court did not find it necessary to examine this challenge in detail, as the primary issue was resolved on other grounds. 3. Request for Directions to Allow Filing of TRAN-1 Electronically or Manually: The Petitioner requested the court to direct the Respondents to accept the TRAN-1 form either electronically or in physical form and to grant the due ITC. The Petitioner argued that despite technical glitches and lack of awareness, it had made genuine efforts to comply with the requirements. The court noted that the Respondents had verified the Petitioner’s eligibility for ITC and found the Petitioner eligible for ?78,62,466/-, but denied the credit on the technicality that the Petitioner had not attempted to file TRAN-1 electronically. The court deemed this denial unfair and a travesty of justice, especially since the Petitioner had complied with the substantive requirements. 4. Eligibility for ITC Amounting to ?78,62,466/-: The court acknowledged that the Respondents had verified and confirmed the Petitioner’s eligibility for ITC amounting to ?78,62,466/-. Despite this, the ITGRC denied the credit due to the Petitioner’s failure to save, submit, or file TRAN-1 electronically. The court found this denial to be a mere technicality and emphasized the importance of substantial justice over procedural technicalities. Citing the Supreme Court decision in Mangalore Chemicals and Fertilizers Ltd. Vs. Deputy Commissioner, the court highlighted that public authorities should not rely on technicalities to deny rightful claims. Conclusion: The court directed the Respondents to accept the TRAN-1 filed by the Petitioner and grant the due ITC of ?78,62,466/- in the electronic credit ledger within two weeks. The court did not find it necessary to examine the challenge to the vires of Rules 117 and 118 of the CGST Rules, 2017, given the resolution of the primary issue. The Petition was allowed with no order as to costs, and the court instructed that the order be digitally signed and communicated to the parties.
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