2021 (12) TMI 1041 - HC - GST

Rectification of mistake - GST Transition Form-l (TRAN-l) - alleged inaction of the respondents in permitting the petitioners to rectify the errors made by the petitioners in Transition Form l (TRAN-l) - HELD THAT - The limitation under sub-rule (1) of Rule 117 of the CGST Rules, was 90 days from the appointed day, which was extendable by a further period not exceeding 90 days as per the first proviso. In other words, the revised declaration in FORM GST TRAN 1 had to be filed within 180 days i.e., within 27.12.2017. While the due date for filing of TRAN 1 form was extended from 27.12.2017 to 31.03.2020, the due date for filing revised declaration in TRAN 1 form was not extended. Courts have held time and again that rules and procedures are intended to sub-serve the cause of justice. In fact procedure is often referred to as handmaid of justice . Laws and procedure are meant to regulate effectively, assist and aid the object of doing substantial and real justice. It is intended to further the ends of justice and not a thing designed to trip people up. In the facts and circumstances of that case, Bombay High Court in HERITAGE LIFESTYLES AND DEVELOPERS AND PRIVATE LIMITED VERSUS THE UNION OF INDIA THROUGH THE REVENUE SECRETARY MINISTRY OF FINANCE DEPARTMENT OF REVENUE CENTRAL BOARD OF INDIRECT TAXES AND CUSTOMS MINISTRY OF FINANCE, STATE OF MAHARASHTRA, THROUGH THE SECRETARY MINISTRY OF FINANCE, DEPARTMENT OF REVENUE, GOODS AND SERVICE TAX COUNCIL, DEPUTY COMMISSIONER OF CGST CENTRAL EXCISE DIVISION-I, RANGE III NAVI MUMBAI, SUPERINTENDENT (COMPUTERS) CGST CENTRAL EXCISE NAVI MUMBAI SUPERINTENDENT OF CGST CENTRAL EXCISE, RANGE-III DIVISION-I, NAVI MUMBAI, DEPUTY COMMISSIONER OF GST CENTRAL EXCISE, MUMBAI COMMISSIONER OF CGST CENTRAL EXCISE, CHIEF COMMISSIONER OF GST CENTRAL EXCISE, MUMBAI 2020 (11) TMI 235 - BOMBAY HIGH COURT took the view that when there was no dispute to the fact that petitioner was otherwise eligible for credit then to deny the benefit of such input credit merely on technical grounds cannot be justified. It was held that merely on technical ground an admitted input credit was sought to be denied to the petitioner, which was wholly unfair and a travesty of justice. Accordingly Bombay High Court directed the respondents to accept the TRAN-I filed by the petitioner and to give the benefit of input tax credit in the electronic credit ledger of the petitioner. The respondent No.1 is directed to take a decision on the representations of the petitioners dated 04.03.2020 either by reopening the online portal, or manually, within a period of four weeks from the date of receipt of a copy of this order - petition allowed.

Summary

Issues Involved:
1. Inaction of respondents in permitting rectification of errors in TRAN-1 forms.
2. Entitlement to carry forward CENVAT credit under the CGST Act and Rules.
3. Non-approval by GST Council for revision of TRAN-1 forms.
4. Legal provisions and precedents regarding rectification of TRAN-1 forms.
5. Technicalities versus substantive rights in tax credit claims.

Issue-wise Detailed Analysis:

1. Inaction of Respondents in Permitting Rectification of Errors in TRAN-1 Forms:
The petitioners, service providers registered under the CGST Act, claimed CENVAT credit in their accounts as of 30.06.2017. They inadvertently entered '0' instead of the actual CENVAT credit in their TRAN-1 forms filed on 26.12.2017. They submitted representations on 04.03.2020 to rectify this error, but received no response from the respondents, leading to the filing of the writ petitions.

2. Entitlement to Carry Forward CENVAT Credit under the CGST Act and Rules:
Under Section 140 of the CGST Act and Rule 117 of the CGST Rules, the petitioners were entitled to carry forward their CENVAT credit into the GST regime. Despite filing TRAN-1 forms within the extended deadline of 31.03.2020, the petitioners' inadvertent errors were not rectified due to the lack of a specific provision for such rectification in the CGST Act or Rules.

3. Non-approval by GST Council for Revision of TRAN-1 Forms:
The respondents argued that the GST Council, in its 13th and 14th meetings, considered and rejected the petitioners' requests to revise their TRAN-1 forms. This decision was communicated to the petitioners via email on 09.07.2021. The respondents emphasized that allowing such rectifications at this stage could lead to numerous similar claims.

4. Legal Provisions and Precedents Regarding Rectification of TRAN-1 Forms:
The court examined Rule 120A of the CGST Rules, which allows for the revision of TRAN-1 forms within the specified period. However, while the deadline for filing TRAN-1 forms was extended to 31.03.2020, the deadline for revising these forms remained 27.12.2017. The court considered precedents from the Delhi High Court in Super India Paper Products and the Karnataka High Court in Aravind Lifestyle Brands Ltd., which allowed rectification of TRAN-1 forms due to inadvertent mistakes, emphasizing that procedural rules should not hinder substantive rights.

5. Technicalities versus Substantive Rights in Tax Credit Claims:
The court highlighted that procedural rules should serve the cause of justice and not obstruct substantive rights. Referring to the Supreme Court's decision in Mangalore Chemicals and Fertilizers Limited, the court emphasized that technical objections should not prevent the rightful claim of CENVAT credit. The Bombay High Court's decision in Heritage Lifestyles and Developers Private Limited was also cited, reinforcing that technical grounds should not deny admitted input credit.

Conclusion:
The court directed respondent No.1 to consider the petitioners' representations dated 04.03.2020 on their merits, either by reopening the online portal or manually, within four weeks. Both writ petitions were allowed to this extent, emphasizing the need to prioritize substantive rights over procedural technicalities. Interlocutory applications, if any, were closed with no order as to costs.