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TMI Blog2025 (1) TMI 1418X X X X Extracts X X X X X X X X Extracts X X X X ..... , furnished by him under the existing law ( within such time and ) in such manner as may be prescribed. As per sub-section 2 to Section 140 of the Central Goods and Services Tax Act, 2017, a registered person, other than a person opting to pay tax under Section 10, shall be entitled to take, in his electronic credit ledger, credit of the unavailed CENVAT credit in respect of capital goods, not carried forward in a return, furnished under the existing law by him, for a period ending with the day immediately preceding the appointed day within such time and in such manner as may be prescribed. Admittedly, the TRAN-01 facility was enabled on the GST portal only on 25.08.2017 which is almost 56 days after the implementation of GST w.e.f 01.07.2017. The petitioner had time upto 29.09.2017 to file TRAN-01 returns as per Rule 117 of the CGST Rules, 2017. Such time was extended upto to 31.10.2017 vide Order No.03/2017 - GST dated 21.09.2017. Thereafter, the said time was further extended upto 30.11.2017 vide Order No.07/2017-GST dated 28.10.2017. Once again, the time for filing TRAN-01 returns was further extended upto 27.12.2017 vide Order No.09/2017 - GST dated 15.11.2017. There was a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he necessary informations under the previous regime for the purpose of Section 140 of the CGST Act, 2017. The Form Tran-I itself was electronically enabled by the Central Board of Indirect Taxes sometime during last week of September 2017 on 25.08.2017 to facilitate to transition of ITC that was earned by the registration under the previous regime. 4. The case of the petitioner is that although the portal was enabled on 25.08.2017, the petitioner was not able to transition the credit legitimately that was lying unutilized on the cut off date viz., 30.06.2017 i.e. one day before the implementation of the respective GST enactments. It is submitted that during the month of July 2017 the tax liability of the petitioner was Rs. 1,13,15,86,524/-. It was partly discharged out of the ITC availed during the month of July 2017 and the balance of Rs. 57,78,89,597/- in cash as the aforesaid input tax credit of Rs. 74,61,65,427/- could not be transitioned. 5. It is the further case of the petitioner is that if the GST portal was enabled w.e.f. 01.07.2017, the petitioner could have legitimately discharged the entire tax liability from and out of the transitional credit of Rs. 74,61,65,427/- ou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 4/- Rs. 99,49,30,557/- Rs. 78,19,71,373/- Rs. 21,29,59,184/- - Total Rs. 17,66,04,13,444/- Rs. 3,06,54,81,564/- Rs. 2,19,58,03,162/- Rs. 86,96,78,402/- Rs. 82,91,19,712/- 11. It is submitted that as reflected above, the petitioner has discharged substantial portion of their output liability for the period July 2017 to November 2017 through cash despite the fact that the petitioner was legally entitled for utilize transitional credit of Rs. 74,61,65,427/-. It is submitted that the accumulated transitional credit of Rs. 82,91,19,712/- severely impacts the working capital of the petitioner. 12. In other words, it is the case of the petitioner that the petitioner paid an amount of Rs. 86,96,78,402/- towards GST in cash, whereas, an amount of Rs. 74,61,65,427/- out of Rs. 82,91,19,712/- (i.e., transitional credit) was available, but, could not be utilized as transitional credit and could not be transitioned immediately at the time of introduction of the GST regime. 13. The petitioner submits that had the transitional credit been made available to the petitioner as on the date of introduction of the GST regime, an amount of Rs. 74,61,65,427/- which could have been used to pa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lity of Form GSTR-2B and did not deal with transitioned credits. This case pertains to transitional credit, which the petitioner could not transition on account of delay in operationalization of Form GST TRAN-01. Admittedly, the decision in the case of Bharti Airtel cited supra did not deal with the teething troubles in transition of credit from erstwhile regime to GST regime. c. The decision apprehended a situation of cascading effect on account of unilateral revision of returns, leading to uncertainty and lack of finality in relation to the returns filed. No such cascading effect would present itself because the petitioner is only seeking to utilize the transitioned credits duly reflected in the electronic credit ledger and the tax already paid in cash is being sought as a refund. The said rectification will not impact any recipient or suppliers, as there will be no change in the output tax liability whatsoever. It is only the mode and manner of payment that will be amended. This is a revenue neutral situation, and the interest of revenue will not be impacted if the rectification as prayed for is conducted. Thus, it is submitted that for the above reasons, the decision ren ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e further submits that the petitioner will debit the corresponding amount of Rs. 74,61,65,527/- or Rs. 57,78,89,597/- as the case may be on receipt of payment. 26. On behalf of the respondent, the learned counsel for the respondent would place reliance on the decision of the Hon'ble Supreme Court in the case of Union of India Vs. Bharti Airtel Ltd. reported in 2021 (54) G.S.T.L 257 (SC) rendered on 28.10.2021 arising out of the order of the Delhi High Court dated 05.05.2020 in the case of Bharti Airtel Ltd. Vs. Union of India & Ors. reported in 2020 (38) G.S.T.L 145 (Del), wherein, it was held that if there is no provision regarding refund of surplus or excess ITC in the electronic credit ledger, it does not follow that the assessee concerned who has discharged OTL by paying cash (which he is free to pay in cash in spite of the surplus or excess electronic credit ledger account), can later on ask for swapping of the entries, so as to show the corresponding OTL amount in the electronic cash ledger from where he can take refund. It is submitted that the payment for discharge of OTL by cash or by way of availing of ITC, is a matter of option, which having been exercised by the as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... text of the delay on the part of the assessee to avail ITC. Since the assessee purportedly was awaiting for Form GSTR - 2A with effect from September 2018, by which time, the assessee therein had discharged the tax liability from and out of the electronic cash register in cash. That apart, it is submitted that the Hon'ble Supreme Court in the said decision as also in para 47 noted that the registered person is not denied of the opportunity to rectify omission or incorrect particulars, which he could do in the return to be furnished for the month or quarter in which sum omission or incorrect particulars are noticed. It is submitted that Section 39 (9) was amended with effect from 01.10.2022, whereas, the decision was rendered on 28.10.2021. That apart, it is submitted that the Hon'ble Supreme Court shall also took note of the fact the registered person had the option to discharge the output tax liability by paying the amount in cash or in electronic credit ledger, whereas, in this case on account of technical glitches, the petitioner could not transition the credit immediately after GST was implemented with effect from 01.07.2017. 34. I have considered the arguments advance ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... antly, the registered person is not denied of the opportunity to rectify omission or incorrect particulars, which he could do in the return to be furnished for the month or quarter in which such omission or incorrect particulars are noticed. Thus, it is not a case of denial of availment of ITC as such. If at all, it is only a postponement of availment of ITC. The ITC amount remains intact in the electronic credit ledger, which can be availed in the subsequent returns including the next financial year. It is a different matter that despite the availability of funds in the electronic credit ledger, the registered person opts to discharge OTL by paying cash. That is a matter of option exercised by the registered person on which the tax authorities have no control, whatsoever, nor they have any role to play in that regard. Further, there is no express provision permitting swapping of entires effected in the electronic cash ledger vis-a-vis the electronic credit ledger or vice versa. 48. A priori, despite such an express mechanism provided by Section 39 (9) read with Rule 61, it was not open to the High Court to proceed on the assumption that the only remedy that can enable the assess ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... xpected to come to a standstill, only to await the respondents making the GST system workable. The failure of the respondents in first putting a workable system in place, before implementing the GST regime, reflects poorly on the concerned that the respondents have shown to the difficulties that the trade faced throughout the length and breadth of the country. Unfortunately, even after passage of over two years, the respondents have not remedied their omissions and failures by taking corrective steps. They continue to take shelter of the limitations in, and the inability of their software systems to grant refund, despite the same being justified. The rights of the parties cannot be subjugated to the poor and inefficient software systems adopted by the respondents. The software systems adopted by the respondents have to be in tune with the law, and not vice versa. The system limitations cannot be a justification to deny the relief, to which the petitioner is legally entitled. We, therefore, reject the hyper technical objections sought to be raised by the respondents-to the effect, that no refund can be granted, because the system did not reflect any credit lying in the ITC ledger of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... period ending with the day immediately preceding the appointed day, furnished by him under the existing law [within such time and] 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 appointed date; or (iii) where the said amount of credit relates to goods manufactured and cleared under such exemption notifications as are notified by the Government. (2) A registered person, other than a person opting to pay tax under section 10, shall be entitled to take, in his electronic credit ledger, credit of the unavailed CENVAT credit in respect of capital goods, not carried forward in a return, furnished under the existing law by him, for the period ending with the day immediately preceding the appointed day [ within such time and ] in such manner as may be prescribed: Provided that the registered person shall not be allowed to take credit unless the said c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ch 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 (1 of 1944) or provision of taxable as well as exempted services under Chapter V of the Finance Act, 1994, (32 of 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 a return furnished under the existing law by him in accordance with the provisions of sub-section (1); and (b) the amount of CENVAT credit of eligible duties in respect of inputs held in stock and inputs contained in semi-finished or finished goods held in stock on the appointed day, relating to such exempted goods or services, in accordance with the provisions of sub-section (3). (5) A registered person shall be entitled to take, in his electronic credit ledger, credit of eligible duties and taxes in respect of inputs or input services received on or after the appointed day but the duty or tax in respect of which has been paid by the supplier under the [existing law within such time and in such manner as may be prescribed] subject to the c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... day [within such time and 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 registered persons having the same Permanent Account Number for which the centralised registration was obtained under the existing law. (9) Where any CENVAT credit availed for the input services provided under the existing law has been reversed due to non-payment of the consideration within a period of three months, such [credit can be reclaimed within such time and in such manner as may be prescribed, subject to] the condition that the registered person has made the payment of the consideration for that supply of services within a period of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s 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 sub-section (1) of section 3 of the Customs Tariff Act, 1975 (51 of 1975)]." 41. The facts are not in dispute. The petitioner had transitional input tax credit of Rs. 82,91,19,712/- and filed TRAN-1 only on 27.12.2017. During the interregnum, the tax liability for the period between 01.07.2017 to the aforesaid date on 27.12.2017 was partially discharged by the petitioner from its electronic credit ledger maintained under Rule 86 of the respective GST Rules, 2017 and partially from electronic cash ledger maintained under Rule 87 of the respective GST Rules, 2017. Out of Rs. 82,91,19,712/-, a sum of Rs. 74,61,65,427/- actually transitioned. 42. In this case, the petitioner could transition ITC of only Rs. 74,61,65,427/- out of Rs. 82,91,19,712/- that was availed prior to 01.07.2017 during December 2017. Meanwhile, a sum of Rs. 86,96,78,402/- was paid in cash and the balance tax liab ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... /- out of Rs. 82,91,19,712/- out of the total tax liability of Rs. 3,06,54,81,564/- during the aforesaid period would not have arisen. 48. Admittedly, the TRAN-01 facility was enabled on the GST portal only on 25.08.2017 which is almost 56 days after the implementation of GST w.e.f 01.07.2017. The petitioner had time upto 29.09.2017 to file TRAN-01 returns as per Rule 117 of the CGST Rules, 2017. Such time was extended upto to 31.10.2017 vide Order No.03/2017 - GST dated 21.09.2017. Thereafter, the said time was further extended upto 30.11.2017 vide Order No.07/2017-GST dated 28.10.2017. Once again, the time for filing TRAN-01 returns was further extended upto 27.12.2017 vide Order No.09/2017 - GST dated 15.11.2017. 49. The petitioner filed the Revised Return only on 27.12.2017 belatedly, by which time, all the supplies effected by the petitioner had incurred a tax liability of Rs. 3,06,54,81,564/-. The part of the liability was discharged by the petitioner from and out of input tax credit availed during the aforesaid period starting from 1st of July, 2017 to a sum of Rs. 2,19,58,03,162/-. Thus, the balance of Rs. 86,96,78,402/- was paid in cash. 50. The decision of the Honourab ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bulk of its tax liability of Rs.3,06,54,81,564/- of ITC availed and out of transitional ITC and would have been required to pay only the difference of Rs.4,05,58,690/- (Rs. 86,96,78,402 - Rs. 82,91,19,712) in cash, instead of Rs. 86,96,78,402/-. 56. The petitioner cannot be burdened with accumulation of ITC as the petitioner is unable to liquidate the same as it is under inverted duty structure. 57. If the system was enabled then and there, the petitioner would have discharged part of its tax liability also from the input that ought to have been allowed to be transitioned in the system. 58. The decision of the Honourable Supreme Court in Union of India Vs. Bharti Airtel Ltd. reported in 2021 (54) G.S.T.L 257 (SC) referred to supra relied by the learned counsel for the respondent does not apply to the facts and circumstances of the case on hand. 59. Therefore, the petitioner should be allowed refund of the aforesaid sum of Rs. 82,91,19,712/- that was paid in cash subject to a debit of equal amount from the petitioner's electronic credit ledger towards the tax liability discharged by the petitioner between July 2017 - November 2017. 60. In the result, the impugned order is ..... X X X X Extracts X X X X X X X X Extracts X X X X
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