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TMI Blog2020 (3) TMI 1087X X X X Extracts X X X X X X X X Extracts X X X X ..... validity. Challenge on the ground of the Rule being unreasonable and violative of Article 14 of the Constitution on India - HELD THAT:- The GST Act deals with the generation and distribution of the revenue. The collected revenue is expended on various functions for which budgetary allocations are made and time limits are stipulated for the execution of various schemes. For fiscal planning, certainty regarding receipt and distribution of revenue is necessary. If relief is to be granted to the individual Petitioner overriding the time limit on equity, the perception of what is equitable will differ from authority to authority. This would lead to uncertainty. The operation of this complicated tax system will become unworkable. The time limit placed under the impugned rule being rooted in need to have certainty in fiscal management, we are of the opinion that equity jurisdiction ought not to be exercised - the time limit stipulated under Rule 117 is neither unreasonable or arbitrary nor violative of Article 14. This rule is in accordance with the purpose laid down in the Act. Meaning of the phrase technical difficulties under Rule 117(1A) and the role of the IT Redressal Cell a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssued. Petition dismissed. - WRIT PETITION NO. 6998 OF 2018 - - - Dated:- 20-3-2020 - NITIN JAMDAR M.S. KARNIK, JJ. Mr. V. Sridharan, Senior Advocate a/w. Mr. Prakash Shah and Mr. Sriram Sridharan i/b. PDS Legal for the Petitioner. Mr. Anil Singh, Addl. Solicitor General a/w. Mr. Pradeep S. Jetly, Senior Advocate a/w. Mr. J.B. Mishra for the Respondents 1,2,4,6 7 Ms. Shruti D. Vyas, B Panel Counsel for the Respondent No.3. JUDGMENT (PER NITIN JAMDAR, J.) :- Rule. Rule made returnable forthwith. Respondents waive service. Taken up for final disposal. 2. The Petitioner - Nelco Limited is a Company incorporated under the Companies Act. It supplies and undertakes various network-related services. Respondent No.1 is the Union of India. Respondent No.2 is the Central Board of Indirect Taxes. Respondent No.3 is the State of Maharashtra. Respondent No.4 is the Goods and Services Tax Council. Respondent No.5 is an officer exercising powers under the Maharashtra Goods and Services Tax Act, 2017. Respondent No.6 is a company which operates the online portal known as GSTN. Respondent No.7 is the Assessing Officer having jurisdiction over the Petitioner. 3. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Central GST Acts and the State GST Acts. Rule 120A was introduced on 15 September 2017 in the CGST Rules with effect from 15 September 2017 providing for a one-time revision of TRAN-1 Form within the same time prescribed in Rule 117. Time was extended for revising and filing TRAN-1 Form to 31 October 2017. On 28 October 2017, this was further extended to 30 November 2011. On 10 November 2017 a press release issued stating that the time of filing/revising Form TRAN-1 had been extended till 31 December 2017, however on 15 November 2017, the time limit was extended only to 27 December 2017. On 3 April 2018 by a circular was issued by the CBEC on the directions of the GST Council an IT Grievance Redressal Mechanism was enacted. On 10 September 2018 Rule 117(1A) inserted into the CGST Rules providing the extension of the time for filing TRAN-1 Form for persons who faced technical difficulties in filing the TRAN-1 Form. Further, under Rule 117(1A) time for filing TRAN-1 Form was extended till 31 January 2019 for persons facing technical difficulties. With further extensions now it is extended to 31 March 2020 for the persons specified in Rule 117(1A). 6. Reverting to the facts of thi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ht for. As regards the Petitioner s case of the Petitioner making a bonafide attempt to file the GST TRAN-1, reply affidavit has been filed by the Commissioner of Central Goods and Services Tax and Central Board of Excise and Customs. It is stated that the Petitioner did not specify the nature of technical difficulties, produced no proof of having been encountered technical difficulties and the e-mail on 27 December 2017 was sent on 17.53 hours. Since no proof was produced that the Petitioner made any bonafide attempt and encountered technical difficulties, the Petitioner cannot be held to be a person facing technical difficulties to give the benefit of the extended period. The case of the Petitioner was examined based on the system log of the portal, and it is clear that the Petitioner had encountered no technical difficulties and no evidence of error was found on the system log. 10. The Petitioner has filed an affidavit in rejoinder stating that the Petitioner made various follow-up attempt by forwarding scanned copies of the letter dated 23 April 2018 to the jurisdictional officer and met the officers to resolve the issue. The Petitioner has asserted in the rejoinder that the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n Article 14 of the Constitution of India. Third, the aspect of technical difficulties under Rule 117(1A) and last, the relief to the present Petitioner. 16. In short, the Petitioner s contentions on the first aspect are: Rule 117 is ultra-vires of Section 140 and is not traceable to any provision of the Act. The phrase used in Section 140 as prescribed manner cannot mean a rule-making power to prescribe the period of limitation. This phrase is judicially construed. The Supreme Court and various High Courts have construed the phrase prescribed manner as not to include the power to make rules imposing a time limit. After the judicial pronouncement, if the legislature later has used the same phrase, it has to be construed as it is judicially interpreted. There is intrinsic evidence in the Act itself to show that whenever the legislature wanted to confer rule-making power, specific phraseology is used. Therefore, whenever the legislature wanted to confer rule-making power to prescribe time limit, it has been specifically so prescribed. It is a uniform and settled legislative practice to use the phrase prescribed manner when the legislature does not intend to confer rule-makin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ule 117 is traceable to this power. The time limit under Rule 117 is not contrary to any provisions of the Act, nor it takes away any substantive right. The judicial pronouncements about the rule-making power and time limit within the earlier tax regime would not if so facto apply for interpreting the transitionary provisions. Further, the GST tax regime and the transitionary provisions are unique. For determining the challenge based on lack of rule-making power, the scheme and the Act have to be seen. The Rules once placed before the Parliament and approved cannot be debated upon for their validity. The availment of Input Tax Credit is regulated by the rules and must be availed within a time period. 18. Rule 117 falls under chapter XIV of the Goods and Services Tax Rules. Chapter XIV is titled Transitional Provisions. This chapter contains six Rules. Rule 117 deals with a tax or duty credit carried forward on the appointed date. Section 118 is regarding the person to whom Section 142(11)(c) applies. Rule 119 is regarding the declaration of stock. Rule 120 deals with details of goods sent on approval basis. Section 120A deals with revision of declaration of TRAN-1 Form. Section ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 140 and the phraseology used for the rule-making power. 21. Chapter XX of the Act deals with Transitionary Provisions. Section 139 is of migration of existing taxpayers, which states that from on and from the appointed day, every person registered under the existing laws and having a valid Permanent Account Number, would be issued a certificate of registration on a provisional basis. Section 139 states that the conditions of form and manner would be as prescribed. The final certificate and the conditions thereof would be as prescribed. Section 140 deals with the transitional arrangement of input tax credit. Section 140 of the CGST Act reads: 140. (1) A registered person, other than a person opting to pay tax under section 10, shall be entitled to take, in his electronic credit ledger, the amount of CENVAT credit of eligible duties carried forward in the return relating to the period ending with the day immediately preceding the appointed day, furnished by him under the existing law in such manner as may be prescribed: Provided that the registered person shall not be allowed to take credit in the following circumstances, namely:- (i) where the said amount of credit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t of duty under the existing law in respect of such inputs; (iv) such invoices or other prescribed documents were issued not earlier than twelve months immediately preceding the appointed day; and (v) the supplier of services is not eligible for any abatement under this Act: Provided that where a registered person, other than a manufacturer or a supplier of services, is not in possession of an invoice or any other documents evidencing payment of duty in respect of inputs, then, such registered person shall, subject to such conditions, limitations and safeguards as may be prescribed, including that the said taxable person shall pass on the benefit of such credit by way of reduced prices to the recipient, be allowed to take credit at such rate and in such manner as may be prescribed. (4) A registered person, who was engaged in the manufacture of taxable as well as exempted goods under the Central Excise Act, 1944 or provision of taxable as well as exempted services under Chapter V of the Finance Act, 1994, but which are liable to tax under this Act, shall be entitled to take, in his electronic credit ledger,- (a) the amount of CENVAT credit carried forward in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ice Distributor shall be eligible for distribution as credit under this Act even if the invoices relating to such services are received on or after the appointed day. (8) Where a registered person having centralized registration under the existing law has obtained a registration under this Act, such person shall be allowed to take, in his electronic credit ledger, credit of the amount of CENVAT credit carried forward in a return, furnished under the existing law by him, in respect of the period ending with the day immediately preceding the appointed day in such manner as may be prescribed: Provided that if the registered person furnishes his return for the period ending with the day immediately preceding the appointed day within three months of the appointed day, such credit shall be allowed subject to the condition that the said return is either an original return or a revised return where the credit has been reduced from that claimed earlier: Provided further that the registered person shall not be allowed to take credit unless the said amount is admissible as input tax credit under this Act: Provided also that such credit may be transferred to any of the regi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ce tax leviable under section 66B of the Finance Act, 1994, in respect of inputs and input services received on or after the appointed day. Explanation 3: For removal of doubts, it is hereby clarified that the expression eligible duties and taxes excludes any cess which has not been specified in Explanation 1 or Explanation 2 and any cess which is collected as additional duty of customs under subsection (1) of section 3 of the Customs Tariff Act, 1975. Sub-sections 1, 2, 3 and 5 lay down the terms and conditions for transfer of credit from CENVAT Credit to Input Tax Credit. Section 140(1) deals with the return to be filed for transfer of credit under the pre- GST regime. Section 140(2) deals with transferring credit regarding Capital Goods. Credit of eligible duties on inputs or finished goods or semi-finished goods held in stock on the appointed day and transition is dealt with under Section 140(3) of the Act. Section 140(5) refers to transferring credit regarding inputs or input services in transit on the appointed day. Section 140 deals with transitional arrangement of input tax credit, and for the present topic, Section 140(1) 1 is material. 22. According to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the case of K.I. Abraham, it failed to notice that in the Supreme Court has held that imposition of the time limit could not be referred to the general rule-making power. 25. In the case of K.I. Abraham, the Supreme Court was considering the Central Sales Tax Act. Reliance is placed on the observations of the Supreme Court in the following passage:- 4. It was contended on behalf of the appellants that the assessee had not filed the declarations in form C before February 16, 1961 according to the third proviso to Rule 6(1) and in view of the breach of this Rule the assessee was not entitled to take advantage of the lower rate of assessment under s. 8(1) of the Act. The opposite view-point was put forward on behalf of the assessee and it was argued that the third proviso to Rule 6(1) was ultra vires of s. 8(4) read with s. 13(4)(e) of the Act. The decision of the question at issue therefore depends on the construction of the phrase in the prescribed manner in s. 8(4) read with s. 13 of the Act. In our opinion, the phrase in the prescribed manner occurring in s. 8(4) of the Act only confers power on the rule-making authority to prescribe a rule stating what particular ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ey. Section 2 provided that if after twenty-one days, the party giving such warrant of attorney shall be declared a bankrupt, then unless the warrant or a copy thereof shall have been filed as aforesaid within 21 days from the execution or unless judgment shall have been signed or execution issued thereon within the same period, such warrant of attorney and the judgment and execution thereon, shall be deemed fraudulent and void against the assignees, As already stated, judgment had been signed on March 11, 1850, i.e., within twenty-one days of the execution of the warrant of attorney, and it was contended on behalf of the defendant that the judgment was valid notwithstanding the failure to file the affidavit as required by section 1 of Stat. 3 G. 4 C. 39. The arguments was rejected and it was held by the Queen's Bench that the warrant of attorney and the judgment thereon were void as against the assignees in bankruptcy. In the course of his judgment, Lord Campbell C.J. observed as follows : The enactment of stat. 12 13 Vict. C. 106, s. 136, is very plain; and I cannot agree to put a forced construction upon it. The Legislature has said there that any warrant of attorney ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dity. As our further analysis will show that the provisions under consideration of the Supreme Court and the context of the legislation were completely different than one at hand. 26. It is necessary to examine the scheme of the Act, the terminology employed conferring general rule-making power and the nature of the Legislation to adjudicate the charge of lack of rule-making power. When the court is called upon to decide a challenge to the validity of subordinate legislation, it will have to consider the nature, object, and scheme of the Act, and the area over which power has been delegated under the Act. 27. The Respondents have stressed upon the distinctiveness of the Act and constitutional amendments governing it. With GST, a large number of Central and State taxes were subsumed in a single tax. The Constitution of India provides for segregation of fiscal powers between the Centre and the States essentially with no overlap. However, by the 100th Constitution Amendment Act, 2016, for the first time, both Centre and the States concurrently have the power to levy and collect GST. A mechanism for the joint operation of GST is evolved. Union levies CGST and the States levy SGST ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... under sub-section (1) or sub-section(2) may provide that a contravention thereof shall be liable to a penalty not exceeding ten thousand rupees. 31. Section 164 (1) empowers the government, on the recommendation of the GST Council, to make rules for carrying out the provisions of the Act. Sub-section (3) declares that power to make a rule under this section also include the power to give retrospective effect. A power to levy penalty in the contravention is declared in sub-section (4). Sub-section (2) is in most extensive terms. The Government can make rules for all or any of the matters which by this Act are required to be, or may be prescribed or in respect of which provisions are to be or may be made by rules. It is clear from reading Section 164(2), that the Government has the power to make rules not only for the matters already prescribed but those may be prescribed in future or in respect of which provisions are to be made by rules. Thus, section 164 governs the most comprehensive range of rule-making power. 32. The reason behind granting an extensive range of rule-making power under this Act is not difficult to comprehend. It is because of the nature of the legislati ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... any such dealer shall be deemed to be a dealer liable to pay tax under the sales tax law of the appropriate State, notwithstanding that the, in fact, may not be so liable under that law. * * * (4) the provisions of sub-suction (1) shall not apply to any sale in the course of inter-State trade or cannoneers unless the dealer selling the goods furnished to the prescribed authority in the prescribed manner (a) a declaration duly filled and signed by the registered dealer to whom the goods are sold containing the prescribed particulars in a prescribed form obtained from the prescribed authority; or (b) if the goods are sold to the Government, not being a registered dealer, a certificate in the prescribed form duly filled and signed by a duly authorised officer of the Government. Section 13 states : (1) The Central Government may, by notification in the Official Gazette, make rules providing for (a) the manner in which applications for registration may be made under this Act, the particulars to be contained therein the procedure for the grant of such registration, the circumstance in which registration may be refused and the form in which the certifica ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... c contingencies and granted limited rule making power. In none of the decisions cited before us by the Petitioner, including that of K.I. Abraham, wide ambit of rule-making power as in Section 164 and that too to deal with transitional provisions of two tax regimes, has been considered. Therefore, the decisions cited cannot be straightway made applicable without reference to the language of section 164 to hold that Rule 117 is ultra vires. 35. The situation regarding input tax credit within GST regime, is also relevant to note. It is governed by Section 16(4) of the Act. Section 16(4) reads thus : Section 16(4) :- A registered person shall not be entitled to take input tax credit in respect of any invoice or debit note for supply of goods or services or both after the due date of furnishing of the return under Section 39 for the month of September following the end of financial year to which such invoice or invoice relating to such debit note pertains or furnishing of the relevant annual return, whichever is earlier. Section 16(4) provides that a registered person shall not be entitled to take input tax credit regarding any invoice or debit note for supply of goods or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... refund for limitation has followed the decision in Willowood. 39. First, the decision of Gujarat High Court in Willowood. Here the Court was considering a challenge to the constitutionality of Section 140(1) of the Gujarat Goods and Services Tax Act. The vires of Rule 117 of the Central and the Gujarat Goods and Services Tax Rules was also challenged. Prayers were sought to permit carry forward of the CENVAT credit. Gujarat High Court took a review of case law on the subject. It referred to Rule 164 of the Act. It observed thus: 25. Section 140 of the Act envisages certain benefits to be carried forward during the regime change. As is well-settled, the reduced rate of duty or concession in payment of duty are in the nature of an exemption and is always open for the Legislature to grant as well as to withdraw such exemption. As noted in case of Jayam Co. [2016] 96 VST 1 (SC) : [2016] 15 SCC 125 , the Supreme Court had observed that input-tax credit is a form of concession provided by the Legislature and can be made available subject to conditions. Likewise, in the case of Reliance Industries Limited [2018] 50 GSTR 14 (SC) : [2017] 16 SCC 28 , it was held and observed th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of persons or even if it extends to all, it can restrict the term or period or limit up to which the concession can be availed of. In the instant case, the period of twelve months is provided as a safeguard against potential misuse of availment of credit during the transition period by placing restriction on availing credit based on documents which are not very old. There is no concept as equality in Tax matters. Apart therefrom, similar restrictions had been in place on the manufacturers/service providers under the Firth proviso to sub-rule (7) of Rule 4 of the erstwhile CENVAT Credit Rules, 2004. It is also argued by Mr. Anil Singh that when in a Value Added Tax there was a restriction on availing of credit in law, now, there is a substantive provision in the new law. However, it is only the transitional provision which inserts or incorporates the above condition, as the Legislature deemed it fit and proper to enforce the new regime from 1-7-2017. When the new regime replaces a bundle of legislations seeking to tax the activity of manufacturers, sales and extension of service, then, it was deemed fit and proper that the transition to the new regime, from the old one, should be s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ght can be availed of. It is in these circumstances that we are unable to agree with the Counsel appearing for the petitioners that the impugned condition defeats any accrued or vested right. It was never vesting in them in such absolute terms, as is argued before us. If the existing law itself imposes condition for its enjoyment or availment, then, it is not possible to agree with the Counsel that such rights under the existing law could have been enjoyed and availed of irrespective of the period or time provided therein. The period or the outer limit is prescribed in the existing law and the Rules of CENVAT credit enacted thereunder. In the circumstances, it is not possible to agree with the Counsel appearing for the petitioners that imposition of the condition vide Clause (iv) is arbitrary, unreasonable and violative of Articles 14 and 19(1)(g) of the Constitution of India. 57.We would refer to the Judgments which are heavily relied upon in this context. It is stated that the rights and privileges accrued during the existing law have been specifically saved under Section 174 of the CGST Act, 2017. If what are saved are the rights and privileges of the nature noted above, th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... prehensive legislation, in the latter legislation the Legislature deemed it fit and proper to continue the earlier or erstwhile arrangement by terming it as a transition or transitional one. That continuation was with conditions and one of the conditions which is questioned here is consistent with the conditions imposed under the existing law. Such a situation was not dealt with in Elcher Motors. Thus, the decision is clearly distinguishable. 62.Reliance is then placed on another decision in the case of Jayam Company (supra). Once again we must see what was dealt with in Jayam Company. The argument before the Hon'ble Supreme Court in Jayam Company was whether subsection (20) of Section 19 of the Tamil Nadu Value Added Tax Act, 2006 could be given retrospective effect. The appellants were dealers and registered as such under the provisions of the above VAT Act. They argued that they had dealt in electronic home appliances. They purchased them from local registered dealers on payment of VAT under the VAT invoice issued by the vendors. Thereafter, there was a resale to consumers under the VAT invoice charging appropriate VAT on their selling price. On resale, VAT is pai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as projected before us in the passing. This is a clear case as operating within the ambit of Jayam Company itself. As is before us, a concession is being provided by the Legislature which but for the provision granting such concession could have not been availed. The availment of CENVAT credit or input tax credit is clearly termed as a concession. With the conditions imposed, the concession could have been availed of. In the absence of a substantive provision granting such concession, there would have been no concession at all. Thus, one cannot pick and choose a condition for challenge by alleging that the availment is undisputedly conditional but one of the conditions, though having nexus with the availment, is unconstitutional or arbitrary and excessive. The nature of that condition, its placement consistent with the scheme is then conveniently ignored. We cannot allow this argument to be built on the basis of reliance on para 18 of the Judgment in Jayam (supra). (emphasis supplied) The ratio laid down by the Division Bench in JCB India Ltd. interpreting the Transitional Provisions and distinguishing the other decisions, is unequivocal. 41. The Petitioner has sought ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... new tax regime, the earlier credit could have lapsed, but as and by way of concession it is permitted to be carried forward for a limited time. Thus, going by the scheme of the Act, under Section 140(1), the reference to Input Tax Credit is not by way of a right, but as a concession. 44. The Petitioner advanced certain ancillary submissions. First, Section 164(1) contemplates recommendation of the GST Council, and the GST Council had recommended a longer period. It was contended that the GST Council recommendations are binding regarding the rule-making power. However, this argument overlooks that power under Section 164(2) is without prejudice to the power under Section 164(1) regarding the recommendation of the GST Council. 45. Second, that the same relief sought for by the Petitioner can be granted under section 54 of the Act and, therefore, necessary directions be issued. This argument is advanced for the first time across the bar with no pleadings or prayers. The Respondents had no opportunity to deal with the same. 46. Third, the scheme of the Act is that there is self-declaration which has to confirmed later and, therefore, there is no prejudice to the Respondents if ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the earlier year of purchase of capital goods and balance 50% in the subsequent year and, therefore, on the relevant date right to take the balance of 50% credit had accrued. It is contended that this right has been saved by saving clause in section 174. The Petitioner has placed strong reliance on the decisions of the Supreme Court in the cases of Eicher Motors and Osram Surya (P) Ltd. It is contended that the time limit has no nexus to the Act. The Respondents have supported the impugned legislation contending that without time limit, the concept of transitional provisions will become nugatory. 51. This analysis needs be prefixed by referring to the scope of judicial scrutiny in the matters of economic legislations. When economic legislation is questioned, the Courts are slow to strike down a provision which may lead to financial complications. The Supreme Court has sounded a note of caution in the cases of R.K Garg v/s. Union of India 1981(4) SCC 675, Bhavesh D. Parish v/s. Union of India 2000(5) SCC 471, Director General of Foreign Trade v/s. Kanak Exports 2016(2) SCC 226, Swiss Ribbons Pvt. Ltd. and Ors. vs. Union of India 2019(4) SCC 17. The summary of the princip ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the new tax structure is put in place. The bench observed this would besides making matching of the credits impractical if not impossible, also affect the revenue collection estimates. The view taken by the Gujarat High Court in Willowood is that Rule 117 is not ultra-vires and there is no indefeasible right to carry forward CENVAT credit and the stipulation of the time limit is reasonable. 53. We do not find that the time limit in the impugned rule is arbitrary or unreasonable. To plan to allocate resources, it is necessary to know the amount of taxes available by a particular time. For an efficient administration of a tax system, certainty, especially in terms of time, is important. Calculations of the tax liability dictated by subjective conditions can lead to uncertainty. Such uncertainty makes it difficult to budget and ensure that funds are allocated where they are most required. The time limit for availing of input tax credit in the transitionary provisions is thus rooted in the larger public interest of having certainty in allocation and planning. The time limit under Rule 117 is thus not irrelevant. 54. Section 140 read with Rule 117 under Chapter XX deals with tran ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ch time limit. Once under the GST law for future transactions time limit is stipulated, then there is nothing unreasonable in the stipulated time limit for the transitional period. 57. Various decisions of the High Courts have been cited by the Petitioner regarding Rule 117 and Section 140 of the Act wherein directions have been issued in writ jurisdiction for opening the TRAN-1 Form. These are Jakap Metind Pvt. Ltd. v/s. Union of India through the Secretary and Ors. Special Civil Application 19951. Adinath Industries v. Union of India 2019-VIL-526-DEL, Adfert Technologies Pvt.Ltd. v. Union of India 2019-VIL-537-P H Afran Technology Pvt.Ltd, Asiad Paints Ltd v. Union of India 2019-VIL-598 KAR, Gillette India Limited v. Union of India 2020-VIL-01-DEL, Jakap Metind Pvt.Ltd. v. Union of India 2019-VIL-556-GUJ, Jay Bee Industries v. M/s.J.B. Industries v. Union of India 201-VIL-570-HP, A.F. Babu v. Union of India 2019-VIL-610-KER, Tara Exports v. The Union of India 2019-VIL-432-MAD, Siddharth Enterprises v. The Nodal Officer 2019-VIL-442-GUJ, Ra Export Siddhartha Enterprise, Triveni Needdles Pvt. Ltd. v. Union of India 2019-VIL-618-DEL, Bhargava Motors v/s. Union of India Or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... en those with needed capabilities and equipment and those who do not and hence it is violative of Article 14. There is no merit in this submission. Entire GST system, not only section 140 and Rule 117 envisage electronic filing. It has an intricate inter-linking regulated by software and data analysis. Numerous departments and enactments now mandate electronic submission of forms. With the ever-expanding sweep of digital data pervading almost all walks of life, it will be a retrograde step to declare a provision unreasonable because it mandates electronic compliance, especially when the enactment in question is an intricate tax regime powered by a software-based system. 60. To summarize, therefore, the time limit stipulated under Rule 117 is neither unreasonable or arbitrary nor violative of Article 14. This rule is in accordance with the purpose laid down in the Act. 61. Now we turn to the third aspect of the matter that is the meaning of the phrase technical difficulties under Rule 117A and the role of the IT Redressal Cell and whether by creating categories discretion is being fettered; To appreciate the Petitioners challenge, the procedure to be followed while submitti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t beyond 31 March 2019, regarding registered persons who could not submit the said declaration by the due date because of technical difficulties on the common portal and regarding whom the GST Council has made a recommendation for such extension. 63. First, the time limit was 31 March 2019. Now, with further extension, it is extended to 31 March 2020. However, for the extended period to apply, certain criterion has to be satisfied. The extension applies to the submission of GST TRAN-1 to be made electronically. It applies only to those registered persons who could not submit their declaration by the due date under Rule 117(1) because of technical difficulties. The technical difficulties have to be the ones referable to the common portal of GST, and last, it in whose cases the Council has made a recommendation for an extension. 64. In the GST Council Meeting held 10 March 2018, a grievance redressal mechanism was set up to address the issue. This mechanism was called IT Grievance Redressal Cell. The IT Grievance Redressal Cell consists of three members, namely CEO (GSTN), DG (Systems) GBEC and a third member from any State nominated by Secretary. GST Council. GSTN, Central a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ve technical issues. Therefore, an IT Grievance Redressal Mechanism was developed by the GST Council. This Committee involved the CEO of the GST, Network Director General of Systems, CBSC and the Nominee from State as technical persons. Based on the report of this Technical Committee, a further recommendation would be made. Therefore, there is no merit in the contention that the power could not have been delegated to the IT Grievance Redressal Committee. 67. Petitioner then contends that the phrase `technical difficulty' in Rule 117(1A) has to be broadly construed. It is not possible to do so. Rule 117(1A) refers to technical difficulties in online submission of TRAN-1 Form on the common portal. These technical difficulties are not the ones faced in general but on the common portal of the GST. The meaning of the phrase `technical difficulty is, thus clear that is the technical difficulties are those which arise at the common portal of GST. 68. The IT Grievance Redressal Cell has taken the system log on the common portal as evidence of attempts made. There is no merit in the criticism of the Petitioner in taking system logs as a basis for determining technical difficultie ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... made in their favour. It is also pointed out that many taxpayers did not file their applications until the last minute. It has been tried to be suggested that filing of TRAN-1 Form was deliberately delayed by some to create fake invoices. 71. Petitioner contended that the categorization based on system log amounts to a fettering of discretion. There is no merit in this submission. The categorization made by the Cell is not fettering the discretion but involving rules of evidence to determine whether a registered user encountered difficulties while submitting forms on the common portal. It is only if the registered user encountered technical difficulties on the common portal, that Rule 117(1A) comes into play. 72. In some decisions referred to in para 57, the Courts have directed the Respondents to open the portal. It is observed therein that many of the registered persons come from a rural and semiliterate background and they may have no record, and they cannot be made to suffer when the systems of the Respondents were not efficient. This approach proceeds on the basis that once there is an acknowledgment of technical difficulties, a liberal view must be taken. However, thoug ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bmission cannot be accepted. We have held that the phrase technical difficulty in Rule 117(1A) of the Rules is in relation to the common portal and the criteria for determining the error on the common portal is a system log on the common portal. The system log is an unquestionable criterion for ascertaining the activity on the portal. An adjudication based on contemporaneous material besides the system log will make ascertainment of technical difficulties unguided. The existence of technical difficulties as seen from the system logs at the common portal is a cogent proof. In the absence thereof, the adjudication will be in the realm of subjectively. The system log on the common portal does not support the case of the Petitioner. This has been communicated to the Petitioner. No direction thus can be issued to the Respondents now to treat the case of the Petitioner as falling within the ambit of Rule 117(1A). 76. To conclude, the time limit stipulated under Rule 117 of the Rules is not ultra vires of the Act. This Rule is traceable to the power conferred under section 164(2) of the Act. The time limit stipulated in Rule 117 is in consonance with the transitional nature of the enac ..... 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