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TMI Blog2021 (8) TMI 1122X X X X Extracts X X X X X X X X Extracts X X X X ..... situation, in petitioner s own case, the Bombay High Court in BMW INDIA FINANCIAL SERVICES PVT. LTD., VERSUS UNION OF INDIA, STATE OF MAHARASHTRA, GOODS AND SERVICE TAX COUNCIL, GOODS AND SERVICES TAX NETWORK (GSTN) NEW DELHI [ 2020 (10) TMI 1217 - BOMBAY HIGH COURT] considering a similar issue of transitional credit of ₹ 17,07,673/- claimed through TRAN-1 filed on 27.12.2017 not being transitioned into the petitioner s electronic credit ledger despite successful filing, while observing that the action of the respondents is unfair and unjust - the Bombay High Court allowed the writ petition and directed the respondents to take such action as may be necessary for transitioning the credit of such amount into petitioner s credit ledger/electronic credit ledger within four weeks from the date of the order. In the facts of the present case, there are no reason to take a different view from the one as expressed by the Bombay High Court, merely because the respondents chose to file a counter in the present writ petition alleging negligence on the part of the petitioner, which in our concerned view, as detailed herein above is without any basis, unsubstantiated apart from being r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of Value Added Tax or Service Tax paid under the existing law, namely, the TVAT Act, or the Finance Act, 1994, proportionate to the extent of supplies made after the appointed day and such credit is to be calculated in the manner to be prescribed. 5. It is also contended that as per Rule 118 of the Central Goods and Services Tax Rules, 2017 (for short, the CGST Rules ) read with Rule 118 of the Telangana Goods and Services Tax Rules, 2017 (for short, the SGST Rules ) every person to whom Section 142(11) of CGST Act, applies, shall within the period specified in Rule 117 of the CGST Act or such further period as extended by the Commissioner, is required to submit a declaration electronically in Form GST TRAN-1 furnishing the proportion of supply on which the Value Added Tax or Service Tax has been paid before the appointed day, but the supply is to be made after the appointed day and the input tax credit admissible thereon. 6. It is the claim of the Petitioner, that it had paid the service tax on 10% interest portion of leasing contracts under the provisions of Finance Act, 1994, which were entered into before the introduction of GST Act, 2017. Similarly, it is also claimed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on of the transitional credit in the online electronic credit ledger of the petitioner, despite the petitioner having filed the same in time as prescribed in Rule 117 of the CGST and the SGST Rules, is due to the technical glitches that have been encountered in the GSTN network and was not due to any fault on the part of the petitioner. 11. As a result of the transitional credit not getting reflected in the electronic credit ledger of the petitioner maintained in Form GST PMT-2 on the common portal of the respondents, which is showing credit as NIL , the petitioner is unable to utilize the accrued credits for discharge of its liability under both the CGST as well as the SGST Act causing financial hardship. 12. The petitioner would further contend that on noticing that the credit was not being reflected in the electronic ledger on the common portal, the petitioner immediately raised a query on this aspect of technical error on the part of GSTN on 02.01.2018 and also followed it up by addressing a letter to the CEO of the GSTN, New Delhi, on 19.03.2018, requesting them to look into the issue and provide a solution for getting the credit transitioned. The petitioner would furth ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bitrary, for the reason that it did not consider the evidence submitted by the petitioner by its earlier communication and that no opportunity of hearing was accorded to the petitioner before deciding to reject the petitioner s plea to look into the issue of technical glitches on the GSTN. 17. The petitioner contends that the claim for transitional credit as filed on 27.02.2017 cannot be denied by the respondents by observing that no technical issues were noticed in their log , since, it is common knowledge that the GSTN network through which implementation of GST and transition from the existing regime of VAT/Central Excise/Service Tax was undertaken, had faced technical glitches. The fact of the GST portal having technical glitches has also been taken note by the Central Board of Indirect Taxes and Customs, which had issued Circular bearing No.39/13/2018-GST dt.03.04.2018 on the issue of addressal of grievances of taxpayers due to technical glitches on the GST portal, wherein in para 8.1, it has been stated that, A large number of taxpayers could not complete the process of TRAN-1 filing either at the stage of original or revised filing as they could not digitally authentica ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s is self-contradictory, to say the least. 24. Further, judicial notice can be taken of the fact that transition to GST with effect from 01.07.2017 was not a smooth affair and in fact had resulted in a chaotic situation across the country, due to failure of GSTN network. Having regard to the said fact, various High Courts, have allowed the writ petitions filed by the affected parties before the respective High Courts and directed the respondents to accept the Form GST TRAN-1 manually. If the assertion of respondents that there were no technical glitches in the GSTN network and the transition to GSTN was smooth, is to be accepted, there was no necessity either for the GST Council to recommend for a redressal mechanism at its 26th council meeting or for the CBIC to extend time for filing Form GST TRAN-1 from time to time till 27.012.2017. Thus, the claim of the respondents that there were no technical glitches in GSTN network and it is only a handful of people, like the petitioner, who could not file the transition claim form electronically, are seeking to make such allegation, is without any substance or basis and lacks bonafides, as the said claim is contrary to the actual situa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l confirming successful submission of the Form GST TRAN-1 electronically, the information furnished thereunder is not transitioned into online electronic credit ledger of the petitioner maintained on the portal, which admittedly is in the control of the respondents. The respondents instead of taking steps to set-right their house in order, are alleging negligence on the part of the petitioner. The said action of the respondents is a highly reprehensible and only goes to show the high-handed attitude and approach of the respondents in dealing with the taxpayers, forgetting the fact that no tax can be collected without authority of law, which implies that the respondents grant the benefit / concession to which a tax payer is entitled to otherwise. By denying the transitional credit as in the present case, the respondents are compelling the tax payer like petitioner to pay tax in full without availing the benefit of adjustment / debit from its credit ledger. 28. It is also to be seen that though the respondents filed a lengthy counter-affidavit, it neither denied or disputed the ARN number generated from their systems and the email received by the petitioner of successful filing of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tedly, the filing was successful, the credit is not being reflected in the Petitioner s ledger and merely on the ground that no technical error has been found on the GSTN, the grievance of the Petitioner has not been addressed. 19 .. 20 .. 21. In this case, we are not examining the issue, whether the Petitioner is entitled to VAT tax credit as claimed by the Petitioner which will be examined by the authorities. What we are concerned with is that despite the admitted successful filing of Form TRAN-1 by the Petitioner on 27th December, 2017, the request of the Petitioner for transitioning of credit has not been approved by the ITGRC merely on the basis that there were no technical glitches on the GSTN side. There is no further explanation or clarification or evidence on the issue by the Respondents. Even the learned Sr. Counsel for the Respondents has only reiterated this stand during his submission. 22. The whole objective of digitalization is to convenience the tax payers and not to harass them. We are conscious that the GST system is still evolving in its implementation. We are of the view that merely because there were no technical glitches in the GSTN with re ..... X X X X Extracts X X X X X X X X Extracts X X X X
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