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TMI Blog2021 (3) TMI 953X X X X Extracts X X X X X X X X Extracts X X X X ..... of this Rule for the class of cases to which it would apply. Further, in the absence of there being defined criteria, the application of the said provision would suffer from arbitrariness. It was also noted that the GST Council itself had found that there can be certain errors apparent on the face of the record and that could be non-technical in nature which would predicate leniency in the matter. The entire country was in a transitional mode insofar as the new regime of GST being implemented with effect from 01.07.2017. It would be relevant to note that in each State earlier, there were independent and separate Sales Tax Regime in the form of VAT (Value Added Tax) Act. Although, there were different enactments in various States of the country, there was an over-all pattern, which emerged inasmuch as there were several similarities that could be found under various VAT enactments of the respective States. But, the Parliament thought it fit that the entire country must be covered under a single tax regime and by amendment made to the Constitution by insertion of Article 246-A and by exercising power under Article 249, brought under one umbrella in the form of the Goods and Service T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... .2020 was amended. This was done by extending the time period granted upto 30.06.2020 by the Notification dated 03.04.2020 issued in the interregnum - the assessees herein must be granted relief by giving them another opportunity to file/revise TRAN-1 either electronically or manually on or before 31.12.2020. We find that the reasoning of the learned single Judge and the relief granted would not call for any interference except to the extent of extending the time within which they would now have to file TRAN-1. The said time-frame has now expired even after successive extensions on 30.08.2020. Therefore, the respondents-assessees are permitted to file/revise TRAN-1 either electronically or manually on or before 31.03.2021. There are no reason to interfere with the order of the learned single Judge - appeal dismissed. - HON BLE Mrs. JUSTICE B.V. NAGARATHNA AND HON BLE Mrs. JUSTICE M.G.UMA W.A.NO.18 OF 2020(T-RES) C/W. W.A.NO.104 OF 2020(T-RES) W.A.NO.105 OF 2020(T-RES) W.A.NO.19 OF 2020(T-RES) W.A.NO.206 OF 2020(T-RES) W.A.NO.207 OF 2020(T-RES) W.A.NO.208 OF 2020(T-RES) W.A.NO.209 OF 2020(T-RES) W.A.NO.210 OF 2020(T-RES) W.A.NO.23 OF 2020(T-RES) W.A.NO.27 OF 2020(T-RES) W.A.NO.294 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s of the claim of the petitioners in accordance with law. 3. The facts succinctly stated are as under: (a) Writ petitioners, who are the registered dealers under the Central Goods and Services Tax Act, 2017 ( the Act for the sake of brevity), sought a direction to the appellants herein to permit them to file TRAN-1, being a statutory form, either electronically or manually by extending the time limit prescribed under Rule 117 of the Central Goods and Services Tax Rules, 2017 ( the Rules for the sake of brevity) read with Section 140 of the Act so as to have the benefit of carry forward of any unutilized credit of duty to the common portal paid under the Finance Act, 1994/Karnataka Value Added Tax Act, 2003. (b) It was contended before the learned Single Judge that several High Courts had granted the said benefit to the assessees and permitted the registered dealers to file or revise TRAN-1 already filed either electronically or manually, by extending the date beyond the cut off date prescribed under Rule 117 of the Rules made under the Act, reserving liberty to the appellants herein to verify the genuineness of the claims made by the registered dealers. In the said writ petitions, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... istered persons who failed to furnish the material for having filed the same by 27.12.2017. But, in the absence of any specific period prescribed under Section 140 of the Act and in terms of introduction of Rules 117(1A) of the Rules and 120A of the Act, held the argument that there was no express provision, could not be accepted. Learned Single Judge observed that having regard to the transition from the earlier regime to the new regime viz., GST regime which is new tax regime common for the entire Nation, in terms of Section 172, a suitable order could be passed taking into consideration the difficulties which would arise during the transitory period. (e) On the aforesaid basis, the learned Single Judge allowed the writ petitions by directing the Appellants herein to permit the petitioners/respondents herein to file/revise TRAN-1 either electronically or manually on or before 31.12.2019. Learned Single Judge further permitted the appellants herein to verify the genuineness or otherwise of the claim of the writ petitioners in accordance with law. Being aggrieved by the order of the learned Single Judge, these appeals have been preferred. Submissions : 4. We have heard Sri.Jeevan J ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssessees had failed to file their declaration forms in Form GST TRAN-1 or Form GST TRAN-2 within the prescribed period. Instead, they filed writ petitions before this Court seeking a direction to the concerned authorities for acceptance of their forms. Learned Single Judge by the impugned order dated 19.11.2019 has directed the appellants herein to permit the assessees to file/revise their declaration forms in GST TRAN-1 or TRAN-2 either electronically or manually on or before 31.12.2019. That the impugned direction is contrary to the catena of judgments, which state that when once the cut off date is given under a statute particularly in fiscal statute, then, ordinarily courts ought not to have interfered with such cut off date. That the object and purpose of giving a cut off date under Section 140 read with Rule 117 of the Rules is well known. The same is for the purpose of smooth and swift transition from the previous existing tax system into the present GST regime which is an indirect tax regime common to the entire country. The time frame given is mandatory in nature and have to be followed in letter and spirit so as to avail the transitional benefits. 7. It was further conten ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ases pertaining to non-filing of TRAN-1 due to IT glitches and also Notification No.48/2018-GST dated 10.09.2018 which was issued under Section 164 of the Act by inserting Sub-rule (1A) to Rule 117 of the Rules, extending the last date for submitting the declaration forms in certain cases only. The extension of time was for those persons who could not submit the declarations by the due date on account of technical difficulties on the common portal and in respect of whom GST Council had made a recommendation for such extension. Also Sub-rule(1A) of Rule 117 of the Rules was amended by Notification No.49/2019/Central Tax dated 09.10.2019 whereby the last date for submitting declaration electronically in Form TRAN-1 was further extended till 31.12.2019 only in respect of registered persons who could not submit the said declaration by the due date on account of technical difficulties in respect of whom GST Council had made a recommendation for such extension. Of course, it was also stated that such time had been extended from time to time and it is stated at the Bar that it was extended upto 31.08.2020. 11. However, provision for extension of time is not available generally to all the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the same could not have been extended by entertaining any belated revised declaration in Form TRAN-1. 13. It was also submitted that the Madras High Court in P.R. Mani Electronics v. Union of India And Ors., [(2020) 80 GSTR 389 (Madras)], (P.R.Mani Electronics), had not concurred with the view of the Delhi High Court in SKH Sheet Metals Components vs. Union Of India Others, [2020 (38) GSTL 592 (Delhi)] (SKH Sheet Metal Components), and it held that the time period prescribed for filing of transitional declaration forms under Rule 117 as mandatory and disregarding the same would render the provision unworkable. 14. Referring to another judgment of Delhi High Court in the case of Brand Equity Treaties Limited vs. The Union of India and Others, [(2020 (38) GSTL 10 (Del.)], (Brand Equity Treaties Limited) which has been stayed by the Hon ble Supreme Court in SLP(C) Nos.7425-28 of 2020 (Union Of India vs. Brand Equity Treaties Limited others) vide order dated 19.06.2020, it was contended that a responsible tax payer would have to be diligent in filing the TRAN-1 or filing revised TRAN-2 forms within the prescribed period as the said time period is mandatory in nature and non adherence t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ave petition has been dismissed by the Hon ble Supreme Court. That there have been several other judgments rendered by different High Courts where the difficulty in filing or revising through GST TRAN-2 by the assessees have been considered and directions have been issued to the Department to redress the grievance and also to permit the assessees to file or revise GST TRAN-2 subsequent to the period prescribed under the Act and the Rules. 17. It was contended that learned single Judge fully appreciated the object and spirit of Rule 117 and the basis for insertion of the amendment in the form of Rule 117(1A) of the Rules and granted the relief to the respondent-assessees which would not call for any interference in these appeals. It was submitted that the learned single Judge appreciated the fact that the Central Government has the powers to pass orders in order to remove defects and the same is not only on the basis of hardship, but due to reasons such as the transition from the existing VAT regime to new GST regime which involved totally new procedures and compliances to be made by the assessees. It is in that context that the expression technical defects should be understood. The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... redited in the account of the respective assessees at the time of procurement of the goods. This right is according to the counsel for the respondents, analogous to an advance payment of tax. That under Section 140(1) of the Act for availing of the input tax credit under the erstwhile regime and for a transitioning under the new GST regime, certain conditions have to be fulfilled. They are as per Section 140 of the Act, extracted as under: 140. TRANSITIONAL ARRANGEMENTS FOR INPUT TAX CREDIT. (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 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 is not admissible as input tax credit under this Act; or (ii) where he has not furnished all the returns required under the existing law for the period of six months immediately preceding the ap ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1) shall- (a) in the case of a claim under sub-section (2) of Section 140, specify separately the following particulars in respect of every item of capital goods as on the appointed day- (i) the amount of tax or duty availed or utilized by way of input tax credit under each of the existing laws till the appointed day; and (ii) the amount of tax or duty yet to be availed or utilized by way of input tax credit under each of the existing laws till the appointed day; (b) in the case of a claim under sub-section (3) or clause (b) of sub-section (4) or sub-section (6) or sub-section (8) of section 140, specify separately the details of stock held on the appointed day; (c) in the case of a claim under sub-section (5) of section 140, furnish the following details, namely:- (i) the name of the supplier, serial number and date of issue of the invoice by the supplier or any document on the basis of which credit of input tax was admissible under the existing law; (ii) the description and value of the goods or services; (iii) the quantity in case of goods and the unit or unit quantity code thereof; (iv) the amount of eligible taxes and duties or, as the case may be, the value added tax [or entr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tax period: Provided that the registered persons filing the declaration in FORM GST TRAN-1 in accordance with sub-rule (1A), may submit the statement in FORM GST TRAN-2 by 31st January, 2020; (iv) the amount of credit allowed shall be credited to the electronic credit ledger of the applicant maintained in FORM GST PMT-2 on the common portal; and (v) the stock of goods on which the credit is availed is so stored that it can be easily identified by the registered person. 25. It is submitted at the Bar that by an amendment made to sub-rule (1A) of Rule 117, the period has been extended till 31.08.2020. Sub-rule (1A) was added to Rule 117 by an amendment by virtue of a Notification dated 10.09.2018. Thereafter, the said Rule has undergone two further amendments on 09.10.2019 and 31.12.2019. Rule 117(1A) reads as under: 117. Tax or duty credit carried forward under any existing law or on goods held in stock on the appointed day.- 1) xxx 1A) Notwithstanding anything contained in sub-rule (1), the Commissioner may, on the recommendations of the Council, extend the date for submitting the declaration electronically in FORM GST TRAN-1 by a further period not beyond 31st March, 2020 in resp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Commissioner, on the recommendations of the Council, to extend the date for submitting the declaration electronically in FORM GST TRAN-1 by a further period not beyond 31.03.2019, in respect of registered persons who could not furnish the said declaration by the due date because of technical difficulties on the common portal and in respect of whom the GST Council had made recommendation for such extension. It was also noted that the further extension was 31.03.2020 and it was extended till 31.08.2020. The extension upto 31.03.2020 for submission of FORM GST TRAN-1 was to apply to those registered assessees, who could not submit their declaration by the due date because of technical difficulties. 28. In the aforesaid case, the Division Bench of Bombay High Court considered the case of the petitioner therein and in respect of the technical difficulties they had and opined if there was no technical difficulties in the common portal for the registered user, there was no purpose in granting any extension of time by way of a concession. In the said case, the petitioner therein had stated that he had technical difficulties in filing the TRAN-1 FORM and therefore, the delay ought to have ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ective sections of the TRAN-1 Form and then enters details under various tables such as Table 5A, 5B, 7A, 8 etc. The taxpayer then saves TRAN-1 and verifies the entered values. After that, the TRAN-1 is submitted on GST Portal. After its submission, TRAN-1 credit is calculated based on the values in the form and entries are made to the Electronic Input Tax Credit (ITC) ledger. Then the taxpayer is required to authenticate TRAN-1 by attaching digital signature using and file TRAN-1 Form. Then the filing process is complete. Thereafter the entries of the amount being posted in the Electronic ITC Ledger can set off liabilities in GSTR-3B. The credit of TRAN-1 is credited and posted in ledgers for use to set off liabilities when the taxpayer submits TRAN-1 Form. This is the method followed by the taxpayer. 31. Reliance has also been placed by the appellants on P.R.Mani Electronics vs. Union of India and Others, [(2020(39) GST(L) 3)], (P.R.Mani), which is a judgment of the Division Bench of the Madras High Court which considered Section 140 of the Act as well as Rule 117 of the Rules. After noting that the validity of Section 140 and Rule 117 under the Act had been upheld by several Hig ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 6 of the CGST Act allows the entitlement to take input tax credit in respect of the post-GST purchase of goods or services within return to be filed under Section 39 for the month of September following the end of financial year to such purchase or furnishing of the relevant annual return, whichever is earlier. Whereas, Rule 117 allows time-limit only up to 27th December, 2017 to claim transitional credit on pre-GST purchases. Therefore, it is arbitrary and unreasonable to discriminate in terms of the time-limit to allow the availment of the input tax credit with respect to the purchase of goods and services made in pre-GST regime and post-GST regime. This discrimination does not have any rationale and, therefore, it is violative of Article 14 of the Constitution. X X X 11. Delhi High Court in a series of cases has expressed similar view as by Gujarat High Court. In its recent judgment in the case of Krish Automotors Pvt. Ltd. Vs UOI and others, 2019- TIOL-2153-HC-DEL-GST= 2019 (29) G.S.T.L. 584 (Del.)],, Delhi High Court has noted its various previous orders and directed as under: 11. Accordingly, a direction is issued to the Respondents to permit the Petitioner to either submit t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... le (1A) to Rule 117 with effect from 10.09.2018. Therefore, the assessees therein were permitted to file revised TRAN-1 who had already filed incorrect TRAN-1 electronically or manually on or before 31.12.2019 and the Revenue was at liberty to verify genuineness state of the petitioners. 34. In SKH Sheet Metal Components, a discussion on the GST system and its procedural short comings was made and thereafter, a reference was made to another judgment of the Delhi High Court in Brand Equity Treaties Limited, by observing that neither the Act nor the Government had prescribed any meaning to the words technical difficulties to the common portal and therefore, it could not be given very restricted meaning. The relevant paragraph Nos.18 and 19 of the said Judgment reads as under: 18. In above noted circumstances, the arbitrary classification, introduced by way of sub Rule (1A), restricting the benefit only to taxpayers whose cases are covered by technical difficulties on common portal subject to recommendations of the GST Council, is arbitrary, vague and unreasonable. What does the phrase technical difficulty on the common portal imply? There is no definition to this concept and the resp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ould indicate that the taxpayers attempted to save/submit the filing of Form GST TRAN-1. Thus, the phrase technical difficulty is being given a restrictive meaning which is supplied by the GST system logs. Conscious of the circumstances that are prevailing, we feel that taxpayers cannot be robbed of their valuable rights on an unreasonable and unfounded basis of them not having filed TRAN-1 Form within 90 days, when civil rights can be enforced within a period of three years from the date of commencement of limitation under the Limitation Act, 1963. 19. The introduction of Sub rule (1A) in Rule 117 is a patchwork solution that does not recognise the entirety of the situation. It sneaks in an exception, without addressing situations taken note of by us. This exception, as worded, is an artificial construction of technical difficulties, limiting it to those existing on the common portal. It is unfair to create this distinction and restrict it to technical snags alone. In our view, there could be various different types of technical difficulties occurring on the common portal which may not be solely on account of the failure to upload the form. The access to the GST portal could be hi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n A.B. Pal Electricals (supra) emphasized that the credit standing in favour of the assessee is a vested property right under Article 300A of the Constitution and cannot be taken away by prescribing a time-limit for availing the same. In SKH Sheet Metals Components, it has been further held as under: 25. Now, when we examine the timelines framed by the Central Government, we must remain focused on the importance of the afore-noted provisions, in relation to the object that is intended to be achieved. At the same time, we also have to examine the consequences that would follow if we construe a provision to be directory and not mandatory. The purpose of the timelines prescribed is just to hasten the migration of taxes from the erstwhile regime to the new GST laws and for swift streamlining of the ITC. The timeline introduced by Rule 117 is purely procedural and as discussed above the same was not treated as sacrosanct. The Central Government has continuously extended the same, by carving out an exception under Rule 117 (1A). Moreover, under none of the provisions of the Act, we can infer the intention of the legislature to create this distinction by way of subordinate legislation. We ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat Rule 117(1A) suffers from the vice of vagueness as the expression technical difficulties on the common portal and its applicability had not been adequately defined nor its parameters asserted. As a result, there was no certainty or predictability about the application of this Rule for the class of cases to which it would apply. Further, in the absence of there being defined criteria, the application of the said provision would suffer from arbitrariness. It was also noted that the GST Council itself had found that there can be certain errors apparent on the face of the record and that could be non-technical in nature which would predicate leniency in the matter. 36. We find that the aforesaid reasoning of the Delhi High Court is, keeping in mind the fact that the entire country was in a transitional mode insofar as the new regime of GST being implemented with effect from 01.07.2017. It would be relevant to note that in each State earlier, there were independent and separate Sales Tax Regime in the form of VAT (Value Added Tax) Act. Although, there were different enactments in various States of the country, there was an over-all pattern, which emerged inasmuch as there were sever ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... would come in the way of uploading Form TRAN-1 or Revised Form TRAN-1, could be considered within the scope and ambit of the expression technical difficulty of common portal . No doubt, it is the policy of the Central Government that there should be digitalization, as far as possible, even with regard to simple transactions, such as buying of household articles and including other complex transactions, such as entering into various types of agreements concerning infrastructure development projects. But, the reality is that the Indian society is not yet so well-versed and adept at utilising online methods, whether it is a simple transaction, or for the purpose of filings, etc., under the taxation enactments. Moreover, all the assessees under the respective enactments cannot be categorized or clubbed as one class of assessees, as that is far from reality. There are various categories such as, small-scale businesses, large-scale businesses and medium-scale industries, each one of whom may have their own challenges to meet, not only in their day-to-day carrying on of their businesses, but also while complying with the requirements under the Act and the Rules in question, especially wh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on'ble Supreme Court has not interfered in the judgment in Adfert Technologies, we are persuaded to apply the same in the instant case. 45. Of course, in the judgments cited by the appellants, the vires of the Rule was challenged along with Section 140 of the Act. The focus of those judgments are on the consideration of vires and upholding of the same and in that context, ultimately, the Bombay High Court and the Madras High Court did not grant any relief to the assessees therein. 46. But, in these cases, the respondent-assessees have not assailed the vires of Section 140 of the Act or Rule 117(1A) of the Rules. On the other hand, their plea is to give a liberal content and meaning to the said expression technical difficulty on common portal in order to ultimately grant relief to them which they are not seeking by way of a concession or a departure to be made by the Revenue, but on the other hand, what would have been their right had they continued in the earlier tax regime. Such a difficulty would not have been envisaged at all if the erstwhile tax regime had been continued. The difficulty of the assessees must be appreciated in the background of the fact that they would have ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... placed reliance on Krish Automotors Pvt. Ltd. Vs. Union of India, [(2019(29) G.S.T.L 584 (Del.)] and has ultimately granted the very relief that was granted by the Punjab and Haryana High Court in Adfert Technologies (supra) by prescribing the timeframe within which the assessees could have filed, either electronically or manual statutory forms on or before 31.12.2019. Further, the respondents have given the liberty to verify the genuineness of the merits of the case in accordance with law. 51. We have adverted to the background and the historical perspective and the manner in which Rule 117 of the Rules was worded initially and as to how with the passage of time, subsequent to 27.12.2017, amendments were made to the said Rule by extending the time for the purpose of submitting the declaration electronically in Form GST TRAN-1. Ultimately, insertion of sub-rule (1A) to Rule 117 with effect from 10.09.2018 was effected. Even thereafter, the sub-rule was amended not once, but thrice so as to extend the time from 31.03.2019 to 31.03.2020 and ultimately, it was extended to 31.08.2020. The last extension upto 31.08.2020 was in exercise of the powers conferred under Section 168A of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... filing, the respondent-assessee did not avail of CENVAT credit for the period from April 2016 to June 2017. Hence, they preferred Writ Petition No.26410 of 2019 (T-RES) and have now been granted the benefit of the learned single Judge s order. 54. Learned counsel, Sri.Jeevan J.Neeralagi submitted, this case is not a case where there was belated filing of TRAN-1 or revised TRAN-1, but a case where the said filings took place in time, but without adverting to the CENVAT credit facilities at all. In the circumstances, no fresh opportunity can be given to the respondent to once again file TRAN-1 returns. That in this case, the question of there being any technical difficulty on the common portal does not arise at all and therefore, learned single Judge ought to have dismissed the writ petition. 55. Insofar as Writ Appeal No.56 of 2020 is concerned, we do not find that the said case could be considered independent of the other cases. The relief granted by the learned single Judge to the respondent-assessee in that case is similar to the one granted to the assessees in the said cases also. This is because the object and purpose is to give the benefit of CENVAT credit earned under the er ..... X X X X Extracts X X X X X X X X Extracts X X X X
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