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TMI Blog2024 (10) TMI 1161X X X X Extracts X X X X X X X X Extracts X X X X ..... ded on 12.12.2017. The respondent authorities are therefore directed to permit the petitioner to file the rectified TRAN-1 with correct details in correct columns so as to avail the transitional credit by the petitioner along with TRAN-2 within a period of eight weeks from today. The impugned show-cause-notice is hereby quashed and set aside - Petition allowed. - HONOURABLE MR. JUSTICE BHARGAV D. KARIA AND HONOURABLE MR. JUSTICE NIRAL R. MEHTA Appearance : For the Petitioner(s) No. 1 : Uchit N Sheth (7336). For the Respondent(s) No. 1,2,3: Mr Ankit Shah (6371). ORAL JUDGMENT (PER : HONOURABLE MR. JUSTICE BHARGAV D. KARIA) 1. Heard learned advocate Mr. Uchit N. Sheth for the petitioner and learned advocate Mr. Ankit Shah for the respondents. 2. Rule returnable forthwith. Learned advocate for the respective respondents waives service of notice of rule for the respective respondents. 3. These petitions are filed under Article 226 of the Constitution of India with the following prayers: Prayer of Special Civil Application No. 22734 of 2019: A. This Hon'ble Court may be pleased to strike down and declare Rule 117 (4) (b) (iii) of the CGST Rules as being ultra-vires Section 140 (3) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ly be granted; D. Such further relief(s) as deemed fit in the facts and circumstances of the case may kindly be granted in the interest of justice for which act of kindness your petitioner shall forever pray. 4. The brief facts of the case are that the petitioner who is an authorized distributor of Cannon cameras and accessories is registered under the provisions of the Central Goods and Service Tax Act, 2017 (for short CGST Act ). 5. The petitioner was also registered under the Central Excise Act, 1944 which continued upto 30.06.2017 till the CGST Act came into force. The petitioner was registered for the goods being traded by it under the provisions of the Central Excise Act, 1944, however as the petitioner was registered under the Central Excise Act, 1944 being a trader of the goods, the goods in stock with the petitioner as on 30.06.2017 were laden with excise duty burden charge and paid by the manufacturer of the goods and recovered from the traders. On such excise duty, the petitioner was entitled to claim transitional tax credit under the provision of Section 140 (3) of the CGST Act pertaining to the excise duty component upon the goods in stock with the petitioner on 30.06. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er under proviso to Section 140 (3) of the CGST Act and therefore the same was legally admissible. 14. The respondent no.2-Chief Commissioner of State Tax issued the show-cause-notice dated 19.11.2019 relying upon Rule 117 (4) (b) (iii) of the CGST Rules calling upon the petitioner to show cause as to why the transitional tax credit claimed by the petitioner should not be demanded and recovered along with interest and penalty. 15. Being aggrieved by the show-cause-notice, the petitioner filed Special Civil Application No. 22734 of 2019 with the aforesaid prayers. 16. This Court issued the notice on 20.12.2019 and by way of ad-interim relief, stayed further proceedings pursuant to the show-cause-notice. 17. During the pendency of the Special Civil Application No.22734 of 2019, the Hon ble Supreme Court in case of Union of India Vs Filco Trade Centre Pvt. Ltd. Special Leave Petition No. 32709 of 2018 and allied matters by order dated 22.07.2022 directed the respondent no.1-Union of India to open the GST portal for a period of two months considering the fact that number of taxable persons had been unable to file Form GST TRAN-1/ TRAN-2, during the initial stage of implementation of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2 Forms. 24. It was submitted that it is not in dispute that the petitioner is entitled to the carry forward of the transitional credit upon the goods based upon the stock as on 30.06.2017 containing the excise as per Rule 117 (4) (a) (ii) of the GST Rules as the stock lying with the petitioner in respect of his documents evidencing the payment of duty are made available. 25. It was therefore submitted that the responded authorities may be directed to open the portal for the petitioner to resubmit GST TRAN-1 and GST TRAN-2 to rectify the mistake which was committed inadvertently by the petitioner while uploading TRAN-1 on 12.12.2017. 26. In support of his submissions, reliance was placed on the decision of this Court in case of Siddharth Enterprise Vs. Nodal Officer reported in (2019) 71 GSTR 346 (Guj.), wherein the Coordinate Bench of this Court has held as under: 9. While the discretion to change the policy in exercise of the executive power, when not trammeled by any statute or rule is wide enough, what is imperative and implicit in terms of Article 14 is that a change in policy must be made fairly and should not give the impression that it was so done arbitrarily or by any ulte ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e of stock carried forward from the previous tax regime without corresponding input tax credit would lead to double taxation on the same subject matter and, therefore, it is arbitrary and irrational. C.B.E. C. Flyer No.20, dated 1.1.2018 had clarified as under : (c) Credit on duty paid stock : A registered taxable person other than manufacturer or service provider, may have a duty paid goods in his stock on 1st July 2017. GST would be payable on all supplies of goods or services made after the appointed day. It is not the intention of the Government to collect tax twice on the same goods. Hence, in such cases, it has been provided that the credit of the duty/tax paid earlier would be admissible as credit. Article 300A provides that no person shall be deprived of property saved by authority of law. While right to the property is no longer a fundamental right but it is still a constitutional right. CENVAT credit earned under the erstwhile Central Excise Law is the property of the writ-applicants and it cannot be appropriated for merely failing to file a declaration in the absence of Law in this respect. It could have been appropriated by the government by providing for the same in th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... wever, due to the petitioner's own negligence, he failed to file GST TRAN-1 correctly due to which, GST TRAN-2 was not available to the Petitioner. The Petitioner did not declare the details in table 7B of GST TRAN-1 in correspondence to the stocks where duty paid invoices were not available. Hence, the TRAN-2 form was not available for the taxpayer. It is therefore imperative to mention that there was no technical glitch. It is system expected behavior as the same is mechanized in such a manner for the ease of the Taxpayers and to further provide clarity, being one time opportunity, the respondents issued the advisory containing the systematic procedure to file GST TRAN. 7. It is submitted that the petitioner due to his own negligence filed form GST TRAN-1 incorrectly, leading to incapacitation of GST TRAN-2. Once the form is submitted, the modification is not allowed, which is system behavior. The system cannot be changed in accordance with an individual taxpayer's unreasonable demand/want. The system is designed to work in a defined behavior and any anomaly or interference will lead to reaping/implanting of technical bugs in the system. Also, the system is designed accor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nsitional credit. 14. It is submitted that Letter dated 16.09.2019 was issued by Respondent No.4 (not by Respondent No. 3 as incorrectly mentioned in the said para) to the Petitioner asking for relevant documents for the purpose of verification of transitional credit claimed in Tran-1 dated 12.12.2017. 15. It is submitted that the petitioner submitted the documents (details of closing stock and list of invoices) on 24.09.2019 to Respondent No.4 (Range Superintendent, Range IV, Div-VII, CGST Ahmedabad South) for verification of transitional credit claimed in Tran-1 dated 12.12.2017. 16. It is submitted that the Range Superintendent, Range IV, Div-VII, CGST Ahmedabad South issued letter dated 04.10.2019 to petitioner requesting to pay up/reverse the transitional credit amounting to Rs. 49,86,999/- along with applicable interest on the grounds of invoices not pertaining to Central Tax. The invoices submitted by petitioner were related to VAT which was in contravention with Section 140 (3) of Central GST Act. 17. Section 140 (3) states as under:-A registered person, who was not liable to be registered under the existing law, or who was engaged in the manufacture of exempted goods or pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rules. Rule 117 (4) (a) (ii) and Rule 117 (4) (b) (iii) an of CGST rule is as under:- (4) (a)(ii) The input tax credit referred to in sub-clause (i) shall be allowed at the rate of sixty per cent on such goods which attract central tax at the rate of nine per cent. or more and forty per cent. for other goods of the central tax applicable on supply of such goods after the appointed date and shall be credited after the central tax payable on such supply has been paid: Provided that where integrated tax is paid on such goods, the amount of credit shall be allowed at the rate of thirty per cent. and twenty per cent. Respectively of the said tax; Rule 117 (4) (b) ((iii) The registered person availing of this scheme and having furnished the details of stock held by him in accordance with the provisions of clause (b) of sub-rule (2), submits a statement in FORM GST TRAN-2 by 31st March 2018, or within such period as extended by the Commissioner, on the recommendations of the Council, for each of the six tax periods during which the scheme is in operation indicating therein, the details of supplies of such goods effected during the tax period:] [ Provided that the registered persons filing ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... petitioner. Further, it is hereby recapitulated that the assertion made by petitioner is false and misleading and there was no technical glitch in the system, it was only due to the negligence of the petitioner that he was unable to further file GST TRAN-2. It must be noted that filing of GST TRAN-1 and GST TRAN-2 is automated with no manual intervention or manipulation. Hence, in the present scenario, system cannot be treated at fault. It is here by submitted that resetting of the form cannot be allowed as the same will impact the entire process due to the negligence of the petitioner. GSTN cannot keep making changes to the inherent design of the system every time a taxpayer misses something or the other in his form or filings. Any such attempt can have debilitating and cascading effect on the entire system designed to work in a specified manner in consonance to the statutes and set policies. 28. Referring to the above averments it was submitted that the respondent authorities are not in a position to open the portal without direction being issued by this Court which shall be placed before the GST Council to direct the respondent authorities to do the needful to enable the petitio ..... X X X X Extracts X X X X X X X X Extracts X X X X
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