AVT McCormick Ingredients Pvt. Ltd. Vs Union of India (Kerala High Court)
Summary: The Kerala High Court dismissed the writ petition filed by AVT McCormick Ingredients Pvt. Ltd. challenging an assessment order dated 15.10.2018 to the extent it disallowed refund of input tax credit lying in the Electronic Credit Ledger under the head SGST credit. The petitioner, engaged in export of spice extracts and oleoresins, was earlier registered under the Kerala Value Added Tax Act, 2003 and had filed Form GST TRAN-1 for transitioning excess input tax credit from its VAT ledger to its Electronic Credit Ledger. According to the petitioner, TRAN-1 was filed in November 2017 and the transitional credit was reflected in the Electronic Credit Ledger on 27.12.2017.
For November 2017, the petitioner sought refund of ITC. The Department rejected the claim on the ground that transitional credit was not credit earned during the relevant period and therefore did not qualify as “Net ITC” under Rule 89(4) of the CGST Rules, 2017, as clarified by Circular No.37/11/2018-GST dated 15.03.2018. The respondents also objected to maintainability of the writ petition because the petitioner had not exhausted the statutory remedy and had approached the High Court after expiry of the limitation period for appeal.
The petitioner argued that an appeal would be futile because the adjudicating authority had acted on a departmental circular that would also bind the appellate authority. It relied upon Filterco and another v. Commissioner of Sales Tax, Madhya Pradesh and another. On merits, reliance was placed upon M/s Ford India Pvt. Ltd. v. Union of India and others and M/s Intas Pharmaceuticals Ltd. v. Union of India and Others to contend that refund could not be denied by ignoring transitional credit appearing in the Electronic Credit Ledger.
The Court examined Section 140 of the CGST Act and Rule 117 of the CGST Rules. It observed that transitional credit representing the closing balance of eligible taxes lying in the last return under the erstwhile regime as on 30.06.2017 would be carried forward as credit in the Electronic Credit Ledger as on 01.07.2017. Consequently, unutilised input tax credit under the erstwhile regime as on 30.06.2017 would be available as the opening balance of unutilised ITC on 01.07.2017.
However, the Court found a crucial evidentiary deficiency in the petitioner’s case. The petitioner had not produced a copy of the declaration in Form GST TRAN-1 required to be filed within the prescribed period and had not produced satisfactory material proving the credit in its Electronic Credit Ledger as on 01.07.2017. The adjudicating authority could allow the refund only upon proof that the amount claimed stood credited in the Electronic Credit Ledger as on 01.07.2017. In the absence of such satisfactory material, the Court found no reason to interfere with the impugned adjudication order.
The High Court also dealt with the belated invocation of its writ jurisdiction. It noted that Sections 107 and 108 of the CGST Act provide statutory remedies of appeal and revision against orders of the adjudicating authority and that the present writ petition had admittedly been filed after expiry of the statutory appeal period. The Court further noticed that the Allahabad High Court judgment in Moriroku UT India Pvt. Ltd., relied upon by the petitioner, had subsequently been set aside by the Supreme Court in Moriroku UT India (P) Ltd. v. State of U.P. and Ors.
Relying on A.V. Venkateswaran, Collector of Customs, Bombay v. Ramchand Sobhraj Wadhwani and another, the Court reiterated that a litigant who, by his own fault, allows the prescribed period for availing the statutory remedy to expire cannot use that failure as a ground for invoking the discretionary jurisdiction of the High Court under Article 226. It further relied upon Rikhab Chand Jain v. Union of India, where the Supreme Court held that although Article 226 itself carries no prescribed limitation period, writ jurisdiction must be invoked with utmost expedition and within a reasonable period; the statutory limitation applicable to the alternative remedy can provide an indication of what constitutes a reasonable period.
The Court also referred to Assistant Commissioner (CT) LTU v. Glaxo Smith Kline Consumer Health Care Ltd., in which the Supreme Court explained that the width of Article 226 jurisdiction does not mean that a High Court should issue a writ inconsistent with the legislative scheme governing the statutory remedy and its limitation.
Accordingly, the Kerala High Court held that its discretionary jurisdiction under Article 226 could not be exercised to resurrect a cause of action that had become unenforceable on account of limitation. Entertaining such an inordinately belated writ petition would also run contrary to the public-policy principle that litigation must attain finality. Finding the writ petition devoid of merit both on the evidentiary aspect concerning transitional credit and on account of the belated challenge, the Court dismissed the writ petition.
Cases Discussed / Relied Upon
- Filterco and Another v. Commissioner of Sales Tax, Madhya Pradesh and Another [(1986) 2 SCC 103] — cited by the petitioner to contend that the statutory appeal would be futile because the departmental circular followed by the adjudicating authority would also bind the appellate authority.
- Ford India Pvt. Ltd. v. Union of India and Others [2024 (12) TMI 570 (Gujarat High Court)] — cited by the petitioner to contend that refund could not be disallowed by ignoring transitional credit available in the Electronic Credit Ledger.
- Intas Pharmaceuticals Ltd. v. Union of India and Others [2024 (1) TMI 1398; (2024) 131 GSTR 1 (Gujarat High Court)] — cited by the petitioner to contend that unutilised credit under the erstwhile regime should be treated as the opening balance in the Electronic Credit Ledger from 01.07.2017.
- Moriroku UT India Pvt. Ltd. v. State of U.P. [2007 (4) TMI 609 (Allahabad High Court)] — cited by the petitioner in support of its claim concerning availability of unutilised credit carried forward from the erstwhile tax regime.
- Singh Enterprises v. Commissioner of Central Excise, Jamshedpur [2008 (221) ELT 163 (SC)] — cited by the respondents for the proposition that an appellate authority cannot entertain an appeal filed beyond the maximum limitation period permitted by the statute.
- Assistant Commissioner of Central Excise v. Krishna Poduval [2006 (1) STR 185 (Kerala High Court)] — cited by the respondents for the proposition that Article 226 jurisdiction cannot be exercised to resurrect a cause of action rendered unenforceable by limitation.
- Moriroku UT India (P) Ltd. v. State of U.P. and Others [(2008) 4 SCC 548 (Supreme Court)] — noticed by the Court while recording that the Allahabad High Court decision relied upon by the petitioner had subsequently been set aside by the Supreme Court.
- A.V. Venkateswaran, Collector of Customs, Bombay v. Ramchand Sobhraj Wadhwani and Another [AIR 1961 SC 1506] — relied upon for the principle that a petitioner who loses the statutory remedy through its own failure to act within limitation cannot invoke that failure as a ground for discretionary relief under Article 226.
- Rikhab Chand Jain v. Union of India [2025 (6) KLT 562 (SC)] — relied upon to hold that writ jurisdiction must be invoked with utmost expedition and that the limitation governing the statutory remedy indicates what may constitute a reasonable period.
- Lt Col K.C. Chandra Bhanu v. Union of India [2026 KHC OnLine 572 (Kerala High Court)] — referred to regarding finality of litigation and application of the maxim interest reipublicae ut sit finis litium.
- Assistant Commissioner (CT) LTU v. Glaxo Smith Kline Consumer Health Care Ltd. [2020 (3) KLT OnLine 1120 (SC)] — relied upon to hold that the High Court should not exercise writ jurisdiction in a manner inconsistent with the statutory remedy and its maximum limitation period.
FULL TEXT OF THE JUDGMENT/ORDER OF KERALA HIGH COURT
The petitioner, a Private Limited Company, filed this writ petition challenging Exhibit P6 assessment order of the Assistant Commissioner dated 15.10.2018 to the extent of disallowing refund of input tax credit lying in the Electronic Credit Ledger of the petitioner under the head ‘SGST credit’.
2. The petitioner company is engaged in the export of various spice extracts and Oleoresins and was registered under the erstwhile Kerala Value Added Tax Act, 2003. The petitioner obtained GSTIN registration and filed GST TRAN-1 form for transitioning the excess input tax credit lying in its VAT ledger onto the Electronic Credit Ledger of the petitioner. It is stated that the TRAN-1 form was filed in November, 2017 and the same was credited to Electronic Credit Ledger on 27.12.2017.
3. Thereafter, when the petitioner sought refund of input tax credit for the month of November, 2017, the assessing authority issued show cause notice proposing to reject the refund application and against the show cause notice, the petitioner filed a detailed reply. However, without appreciating the contentions of the petitioner, the 4th respondent assessing authority, rejected the claim for refund of input tax credit.
4. In the counter affidavit filed by respondents 1 to 5, it is stated that the refund claim of the petitioner was rejected for the reason that transitional credit is not a credit earned during the relevant period and does not qualify as ‘Net ITC’ in terms with Rule 89(4) of the Central Goods and Services Tax Rules, 2017 (‘CGST Rules’ for short) as clarified by Exhibit P7 Circular No.37/11/2018-GST dated 15.3.2018. It is also contended that the writ petition was filed without exhausting the statutory remedies and after the expiry of the period of limitation for filing appeal and therefore, this belated writ petition cannot be entertained.
5. Heard Sri. A. Kumar, learned Senior counsel for the writ petitioner and Sri. P.R. Sreejith, the learned Standing Counsel for respondents 1 to 5.
6. The learned counsel for the writ petitioner argued that the adjudicating authority passed Exhibit P6 order based on a circular issued by the Department and the same is also binding on the appellate authority and therefore, it would be a mere exercise in futility for the petitioner to urge the same contentions before the appellate authority and only this Court can consider whether the circular is against the statutory provisions and Rules and also cited the decision of the Honourable Supreme Court in Filterco and another v. Commissioner of Sales Tax, Madhya Pradesh and another [ (1986) 2 SCC 103 = 1986(2) TMI 58- Supreme Court].
7. The learned counsel for the petitioner cited the decision of the Gujarat High Court in M/s Ford India Pvt. Ltd. v. Union of India and others [2024 (12) TMI 570] to point out that the authorities cannot disallow refund by ignoring transitional credit in the Electronic Credit Ledger. The learned counsel for the petitioner also cited the decision of the Gujarat High court in M/s. Intas Pharmaceuticals Ltd. v. Union of India and Others [2024 (1) TMI 1398 = (2024) 131 GSTR 1] and the decision of the Allahabad High Court in Moriroku UT India Pvt. Ltd. v. State of U.P [2007 (4) TMI 609] in support of the contention that the unutilised input tax credit in erstwhile regime as on 30.06.2017 shall be available as opening balance in the Electronic Credit Ledger as on 01.07.2017.
8. Per contra, the learned counsel for the respondents cited the decision of the Honourable Supreme Court in Singh Enterprises v. Commissioner OF C. Ex., Jamshedpur [2008 (221) E.L.T 163 (S.C) to point out that the appellate authority has no power to allow appeal presented beyond the period of limitation and also the decision of a Division Bench of this Court in Assistant Commissioner of Central Excise v. Krishna Poduval [2006(1) S.T.R. 185 (Ker.) to point out that the jurisdiction of the High Court under Article 226 of the Constitution of India is not so wide as to resurrect a cause of action which has become unenforceable on account of law of limitation.
9. In paragraph 3 of Exhibit P6 assessment order, it is stated as follows:
“On scrutiny of the refund claim, it is seen that that the Net Input Tax under the head SGST in Form GST RFD-O1A is taken as Rs.78,29,523/- whereas as per GSTR-3B for the month of November 2017 and the statement submitted, the Input tax for SGST amounts to Rs.29,84,970/-. Upon verification with the Electronic Credit Ledger, it is understood that the amount of SGST Input tax carried forward under Transitional Provisions of CGST Act, 2017, i.e. Rs.49,54,739/- is also included in the Net Input Tax for the month of November, 2017 while filing refund claim but the said amount was credited into the electronic credit ledger on 27-12-2017 which is not pertaining to the relevant tax period as per Rule 89(4) of the CGST Rules, 2017.”
10. Section 140 of the Central Goods and Services Tax Act, 2017 (‘CGST Act’ for short) provides for transitional arrangements for input tax credit. As per Rule 117 of the CGST Rules, if a registered person has to claim transitional credit under Section 140 of the CGST Act, a declaration in Form GST TRAN-1 is required to be filed within ninety days of the appointed day i.e., on or before 28.09.2017. As per the above said provisions, the transitional credit, closing balance of credit of taxes lying and shown in last return filed by the assessee prior to introduction of CGST i.e., as on 30.06.2017 will be carried forward as credit in Electronic Credit ledger as on 01.07.2017. Therefore, the credit balance of the unutilised input tax in erstwhile regime as on 30.06.2017 shall be available as opening balance of unutilised input tax credit as on 01.07.2017.
11. In the present case, the petitioner has not produced a copy of the declaration in Form GST TRAN-1 as required to be filed within nintey days of the appointed day. The petitioner has not produced any satisfactory material to prove his credit in the Electronic Credit Ledger as on 01.07.2017. The adjudicating authority can allow the refund only if it is proved that the amount claimed was credited into the Electronic Credit Ledger as on 01.07.2017 and in the absence of satisfactory material to prove the same, I find no reason to interfere with the impugned order of the adjudicating authority.
12. Admittedly, the present writ petition was filed after the expiry of the statutory period prescribed for filing an appeal. Sections 107 and 108 of the CGST Act shows that there is provision for filing appeal and revision against the order passed by the adjudicating authority. The decision of the Honourable Supreme Court in Moriroku UT India (P) Ltd. v. State of U.P and Ors. [(2008) 4 SCC 548] shows that the decision of the Allahabad High Court in MORIROKU UT INDIA PVT. LTD. (cited supra) was set aside by the Honourable Supreme Court.
13. As noticed earlier, the present writ petition was filed after the expiry of the period of limitation for filing the statutory appeal. In A. V. Venkateswaran, Collector of Customs, Bombay v. Ramchand Sobhraj Wadhwani and another [AIR 1961 SC 1506 = 1961 KLT OnLine 1276 (SC)], the Hon’ble Supreme Court held thus:
“11. …we must express our dissent from the reasoning by which the learned Judges of the High Court held that the writ petitioner was absolved from the normal obligation to exhaust his statutory remedies before invoking the jurisdiction of the High Court under Art. 226 of the Constitution. If a petitioner has disabled himself from availing himself of the statutory remedy by his own fault in not doing so within the prescribed time, he cannot certainly be permitted to urge that as a ground for the Court dealing with his petition under Art. 226 to exercise its discretion in his favour. Indeed, the second passage extracted from the Judgment of the learned C. J. in Mohammad Nooh’s case 1958 SCR 595 at pp. 605-607 : (AIR 1958 SC 86 at p. 93) with its reference to the right to appeal being lost “through no fault of his own” emphasizes this aspect of the rule.”
14. In Rikhab Chand Jain v. Union of India [2025 (6) KLT 562 (SC)], the Honourable Supreme Court held that if a petitioner has disabled himself from availing a statutory remedy, the discretionary remedy under Article 226 of the Constitution of India cannot be exercised in his favour. In the said decision, it was also held as follows in paragraph 13:
“13. Although there is no period of limitation for invoking the writ jurisdiction of a High Court under Article 226, all that the courts insist is invocation of its jurisdiction with utmost expedition and, at any rate, within a “reasonable period”. What would constitute “reasonable period” cannot be put in a straight-jacket, and it must invariably depend on the facts and circumstances of each particular case. Nonetheless, the period of limitation prescribed by an enactment for availing the alternative remedy provided thereunder in certain cases does provide indication as to what should be the “reasonable period” within which the writ jurisdiction has to be invoked.”
15. The jurisdiction of the High Court under Article 226 of the Constitution of India is not so wide as to resurrect a cause of action which has become unenforceable on account of law of limitation. In Lt Col K. C. Chandra Bhanu v. Union of India [2026 KHC OnLine 572], a Division Bench of this Court held that when the issue is finally decided by a competent forum and attained finality, the maxim ‘interest reipublicae ut sit finis litium’ would apply. The Honourable Supreme Court in Assistant Commissioner (CT) LTU v. Glaxo Smith Kline Consumer Health Care Ltd. [2020 (3) KLT OnLIne 1120 (SC)], held as follows in para 15:
“15. We may now revert to the Full Bench decision of the Andhra Pradesh High Court in Electronics Corporation of India Ltd. (supra), which had adopted the view taken by the Full Bench of the Gujarat High Court in Panoli Intermediate (India) Pvt. Ltd. v. Union of India & Ors. (2015 (3) KLT SN 30 (C.No.40) Guj. = AIR 2015 Guj. 97) and also of the Karnataka High Court in Phoenix Plasts Company v. Commissioner of Central Excise (AppealI), Bangalore (2013 (298) ELT 481 (Kar.)). The logic applied in these decisions proceeds on fallacious premise. For, these decisions are premised on the logic that provision such as Section 31 of the 1995 Act, cannot curtail the jurisdiction of the High Court under Articles 226 and 227 of the Constitution. This approach is faulty. It is not a matter of taking away the jurisdiction of the High Court. In a given case, the assessee may approach the High Court before the statutory period of appeal expires to challenge the assessment order by way of writ petition on the ground that the same is without jurisdiction or passed in excess of jurisdiction by overstepping or crossing the limits of jurisdiction including in flagrant disregard of law and rules of procedure or in violation of principles of natural justice, where no procedure is specified. The High Court may accede to such a challenge and can also nonsuit the petitioner on the ground that alternative efficacious remedy is available and that be invoked by the writ petitioner. However, if the writ petitioner choses to approach the High Court after expiry of the maximum limitation period of 60 days prescribed under Section 31 of the 2005 Act, the High Court cannot disregard the statutory period for redressal of the grievance and entertain the writ petition of such a party as a matter of course. Doing so would be in the teeth of the principle underlying the dictum of a threeJudge Bench of this Court in Oil and Natural Gas Corporation Limited (supra). In other words, the fact that the High Court has wide powers, does not mean that it would issue a writ which may be inconsistent with the legislative intent regarding the dispensation explicitly prescribed under Section 31 of the 2005 Act. That would render the legislative scheme and intention behind the stated provision otiose.”
16.It is the specific case of the respondents that the petitioner cannot reagitate an issue finally decided by a competent forum and attained finality, by filing an inordinately belated writ petition. I find that the discretionary jurisdiction under Article 226 of the Constitution of India cannot be exercised to resurrect a cause of action which has become unenforceable on account of law of limitation. I have no doubt that entertaining such a belated writ petition would be contrary to public policy that it is for the public good that there be an end to litigation. Therefore, I find that the writ petition is devoid of merit and is liable to be dismissed.
In the result, the writ petition is dismissed.
Processed strictly from the supplied content; the principal case was not self-linked. Exact TaxGuru destinations were positively verified for Rikhab Chand Jain and Glaxo Smith Kline, while Section 140 was linked to the verified TaxGuru provision resource. Other references were left plain where an exact destination was not independently established. The supplied article and Full Text were preserved.
