2021 (6) TMI 79 - HC - GST

CENVAT credit - inputs utilized for providing output services - HELD THAT - In the present case, the Court is satisfied that the Petitioner's difficulty in filling up the correct credit amount in the TRAN-1 Form is a genuine one which should not preclude him from having his claim examined by the authorities in accordance with law - Accordingly, a direction is issued to the Respondents to either open the portal so as to enable the Petitioner to file TRAN-1 Form electronically or to accept a manually filed TRAN-1 Form on or before 30th June, 2021. Petition allowed.

Summary

Issues Involved:
Claim of CENVAT credit on inputs for providing output services, rejection of CENVAT credit for earlier years, appeal against orders allowing CENVAT credit, objection to adjustment of CENVAT credit for pre-deposit of 7.5%, failure to file TRAN-1 Form for carrying forward CENVAT credit to GST regime, reliance on judgments of other High Courts, technical glitches in GST portal affecting filing deadlines, interpretation of Rule 117 of CGST Rules.

Analysis:

1. Claim of CENVAT Credit:
The petitioner, a club in New Delhi, claimed CENVAT credit on inputs for output services but initially failed to avail it due to lack of awareness. After legal proceedings, the Adjudicating Authority allowed partial CENVAT credit for specific years. Subsequent appeals led to the Commissioner (Appeals) allowing further credit for earlier years. However, an objection arose regarding the adjustment of CENVAT credit for a mandatory pre-deposit for appealing before CESTAT.

2. Failure to File TRAN-1 Form:
A critical issue emerged when Respondent No. 3 objected that the CENVAT credit was not transitioned to the GST regime via the TRAN-1 Form. The petitioner argued that technical glitches prevented timely filing, leading to the expiration of the deadline. The petitioner sought permission to file the form post-deadline due to substantive rights accrued pre-GST implementation.

3. Interpretation of Rule 117 and Judicial Precedents:
The respondents relied on judgments from other High Courts to support their contention that the petitioner should have filed the TRAN-1 Form within the prescribed time under the CGST Rules. However, the court examined the precedents and interpreted Rule 117 as directory, not mandatory. The court cited various judgments, including Brand Equity Treaties Limited and others, to support its view that the petitioner's delay in filing the form should not result in losing the accumulated CENVAT credit.

4. Court's Findings and Decision:
The court acknowledged technical glitches in the GST portal and extended deadlines due to system issues. Considering the petitioner's genuine difficulty in filing the correct credit amount in the TRAN-1 Form, the court directed the respondents to facilitate electronic or manual filing of the form by a specified date. The court emphasized that the petitioner should not lose the right to claim CENVAT credit due to procedural delays.

5. Conclusion:
Ultimately, the court allowed the petition, directing the respondents to enable the petitioner to file the TRAN-1 Form to transition the accumulated CENVAT credit to the GST regime. The court's decision aimed to uphold the petitioner's right to claim the credit despite procedural challenges and technical issues faced during the transition period.