Case Law Details

Case Name : Ratek Pheon Friction Technologies Private Limited Vs Principal Commissioner (Allahabad High Court)
Appeal Number : Writ Tax No. 477 of 2021
Date of Judgement/Order : 15/09/2021
Related Assessment Year :

Ratek Pheon Friction Technologies Private Limited Vs Principal Commissioner (Allahabad High Court)

HC held that Clear intent of the legislature is to grant benefit of CENVAT and ITC under the pre-existing laws, as may have been carried forward on the appointed date 01.07.2017. In such circumstances, if the GST Portal had worked seamlessly, all petitioners would have submitted/revised/re-revised electronically, their Forms GST TRAN-1 and/or TRAN-2 within the time granted. In that situation, all petitioners would clearly be entitled to avail ITC under the CGST Act and the UPGST Act, without any objection by the State/revenue authorities. Taxing statute and equity considerations are not natural allies. At the same time, in the context of a purely procedural requirement and transition provision, we cannot act unmindful of that consequence – if the respondents had offered a functional system, the State could not have deprived the petitioners of transition credit of CENVAT and ITC (under the repealed laws).

Thus, we have no hesitation in observing that a reasonable opportunity ought to have been granted to all “registered persons”/taxpayers to submit/revise/re-revise electronically their Form GST TRAN-1/TRAN-2.

Label with abbreviation GST Goods and Services Tax

 For the reasons given above, we allow all the writ petitions with the following directions:

(i) All petitioners before this Court may first file physical Form GST TRAN-1/TRAN-2 before their respective jurisdictional authority, within a period of four weeks from today.

(ii) That jurisdictional authority shall then make a report in writing on the same, as to compliances contemplated under Section 140 of the CGST Act and Rule 117 of the CGST Rules.

(iii) In case, no objection be taken, a report to submit/revise/re-revise the Form GST TRAN-1/TRAN-2 electronically, would be made by the concerned jurisdictional authority, within a period of two weeks.

(iv) In the event of any objection arising, one limited opportunity may be given to that petitioner to correct or revise or re-revise the physical Form GST TRAN-1/TRAN-2. That exercise may be completed within a period of three weeks and the report be submitted accordingly.

(v) Upon completion of that exercise, the jurisdictional authority shall forward his report along with said physical GST TRAN-1/TRAN-2 to the GST Network, within a further period of one week, with a copy of that communication to the petitioner concerned, through Email or other approved mode. No form submitted in compliance of this order would be rejected/declined as filed outside time.

(vi) The GST Network shall thereupon either itself upload the GST TRAN-1/TRAN-2, within two weeks of receipt of such communication or allow that petitioner opportunity to upload those details, within a reasonable time.

FULL TEXT OF THE JUDGMENT/ORDER OF ALLAHABAD HIGH COURT

1. Heard Mr Shubham Agarwal, Mr Nishant Mishra, Mr Praveen Kumar, Mr Suyash Agarwal, Mr Rahul Agarwal, Mr Rishi Raj Kapoor, Mr Ayush Khanna, Mr Harsh Vardhan Gupta, Mr Vishwjit, Mr Krishnaji Khare, Mr Vinayak Mithal, Mr Pranjal Shukla, Ms Sanyukta Singh and Ms Pooja Talwar for the petitioners; Mr Manish Goyal, learned Additional Advocate General, assisted by Mr Apurva Hajela, Mr A.C. Tripathi, Mr B.P. Singh Kachhawah and Mr Manoj Kumar Kushwaha for the State; Mr Shashi Prakash Singh, learned Additional Solicitor General of India, assisted by Mr Sudarshan Singh, Mr Krishna Ji Shukla, Mr Anant Kumar Tiwari, Mr Rajesh Tripathi, Mr Ishan Shishu and Mr. Manoj Kumar Singh for the Union of India and; Mr Ramesh Chandra Shukla, Mr Ashok Singh, Mr Parv Agarwal, Mr Dhananjai Awasthi, Mr Krishna Agarwal, Mr Gaurav Mahajan, Mr Amit Mahajan, Mr Ankur Agarwal and Mr B.K. Singh Raghuvanshi, for the CGST authorities.

2. This batch of writ petitions has been filed seeking relief in the nature of mandamus commanding the respondent authorities to allow the petitioners to submit/revise/re-revise electronically, their respective declarations on Form GST TRAN-1 and GST TRAN-2, under the provisions of the Central Goods and Services Tax Act, 2017 (hereinafter referred to as the ‘CGST Act’) and, the Uttar Pradesh Goods and Services Tax Act, 2017 (hereinafter referred to as the ‘UPGST Act’), to carry forward the CENVAT and VAT Input Tax Credit, under the CGST Act , 2017 and the U.P. GST Act, 2017. No other relief has been pressed at the hearing.

3. On facts, broadly there are three types of cases. First, some of the petitioners claim, they had submitted electronically, the Form GST TRAN-1 and/or TRAN-2 (on the GST Portal), within time, but errors had crept in that Form so submitted. They attempted to correct/revise that Form GST TRAN-1 and/or TRAN-2 on the GST Portal within time granted for the same but could not succeed due to technical glitches on the GST Portal. They have evidence of such attempt/s made. In the second type of cases, the petitioners claim, they could not submit electronically, the Form GST TRAN-1 and/or TRAN-2 within time granted (despite efforts made by them), due to technical glitches on the GST Portal. They have evidence of such attempt/s made. The third type of cases, involve a variety of the first two types described above. Therein, petitioners claim, though they tried to submit or revise electronically, the Form GST TRAN-1 and/or TRAN-2 on the GST Portal, they could not succeed in the same. They do not have any evidence of such attempt made to submit or revise electronically, the Form GST TRAN-1 and/or TRAN-2. Thus, the petitioners claim denial of full benefit of transition credit arising from transactions performed under the repealed indirect tax enactments.

4. For the purposes of convenience, we have heard this batch of writ petitions on the facts disclosed in Writ Tax No. 477 of 2021 (M/s Ratek Pheon Friction Technologies Private Limited Vs. Principal Commissioner, Central Goods and Services Tax & Ors.); Writ Tax No. 225 of 2021 (M/s Modern Plywood Center Vs. Union of India & Ors.) and; Writ Tax No. 872 of 2018 (Allied Agencies Vs. Union of India & 4 Ors.). The facts of these three cases would be sufficient to cover the discussion necessary for the purposes of our decision. At the same time, we deem appropriate to take note of the basic facts involved in all cases in this batch of petitions. Those are as below.

S N
WP (Writ Tax)
CENVAT Available as on 30th June 2017 [in Rs.]
ITC Available as on 30th June 2017 [in Rs.]
Credit on
Stocks as
on 30th

June 2017
Return
filed
under the
erstwhile
regime
along
with date
Date of
making first
attempt to
upload
TRAN-1/2
Date of
uploading
TRAN-1/2
Date of making attempt to revise TRAN-
1/2
1
422 /2018
31,34,052
48,92,772
To be
verified
9.12.2017
9.12.2017
19.12.2017
2
546 /2018
3,22,760
To be
verified
27.12.2017
3
567 /2018
6,44,875.55
To be
verified
27.12.2017
4
630 /2018
3,69,552
To be
verified
27.12.2017
5
694 /2018
1,49,922
1,46,415
6.7.2017
27.12.2017
6
702 /2018
27,76,000
To be
verified
27.12.2017
7
720 /2018
4,43,479
28.9.2017
27.12.2017
8
721 /2018
4,18,067
28.9.2017
27.12.2017
9
727 /2018
1,68,41,568
To be
verified
27.12.2017
28.12.2017
10
736 /2018
75,18,296
To be
verified
December 2017
11
774 /2018
23,75,831.65
2,35,81,098
To be
verified
26.10.2017
26.10.2017
27.12.2017
12
792 /2018
11,44,322
Claiming
only
CENVAT
11,44,322
Claiming
only
CENVAT
26.12.2017
27.12.2017
13
800 /2018
1,49,922
1,46,415
6.7.2017
27.12.2017
14
802 /2018
4,81,445
To be
verified
27.12.2017
15
807 /2018
22,06,927
To be
verified
27.12.2017
16
823 /2018
20,15,902
To be
verified
27.12.2017
17
829 /2018
30,40,657
To be verified
27.12.2017
Screenshot of attempt to upload TRAN 1 available and invoices have been processed
18
838 /2018
27,06,843.03
To be
verified
27.12.2017
27.12.2017
19
847 /2018
55,60,967
To be
verified
27.12.2017
27.12.2017
27.12.2017
20
856 /2018
8,51,817
To be
verified
27.12.2017
21
859 /2018
6,16,026.66
To be
verified
27.12.2017
22
872 /2018
16,00,639.74
To be
verified
25 to
27.12.2017
23
883 /2018
1,86,621
3,13,608
16.7.2017
17.9.2017
January
2018
24
891 /2018
7,38,997
Nil
Excise
Return filed
on
07.07.2017
& VAT
Return filed
on
21.07.2017
13.12.2017
13.12.2017
25
896 /2018
1,56,26,966
To be
verified
27.12.2017
26
936 /2018
25,01,309
31.5.18
24.11.17
27
944 / 2018
9,57,180
9,57,180
To be
verified
27.12.2017
28
965/ 2018
8,23,297
To be verified
27.12.2017
29
984 / 2018
5,72,466
July 2017
27.12.2017
30
1022/ 2018
1,26,13,183
To be
verified
After
27.12.2017
31
1029 /2018
15,71,653
To be
verified
27.12.17
32
1030 /2018
10,13,840
10,95,261
To be
verified
27.12.17
27.12.17
27.12.17
33
1031 /2018
53,12,047
To be
verified
27.12.17
34
1032 /2018
2,98,611
To be
verified
27.12.17
35
1037 /2018
28,02,554
To be
verified
27.12.17
36
1097/ 2018
15,45,821/-
VAT
20-07-2017
ER-1
14-07-2017
25.12.2017
37
1111/ 2018
19,69,845
23,74,294
20.7.2017
27.12.2017
38
1115/2018
70,09,486
20.7.2017
27.12.2017
27.12.2017
11.1.2018
39
1143/2018
1,81,075
To be
verified
27.12.2017
40
1174/18
21,20,290
To be
verified
27.12.17
41
1218/18
29,86,189
To be
verified
27.12.17
42
1251/2018
3,08,653
VAT
19-07-2017
27.12.2017
43
1370/2018
2,62,877
VAT
20.7.2017
27.12.2017
44
2/2019
6,93,914
To be
verified
27.12.20147
27.12.2017
45
119/2019
1075302
To be
verified
27.12.2017
27.12.2017
46
361/2019
1,81,000
08.07.2017
Before and
After27.12.2017
47
363/2019
3,50,000
To be
verified
25.12.2017
After
27.12.2017
48
394/2019
54,675
17.7.2017
27.12.2017
49
401/2019
10,00,223
To be
verified
9.7.17
7.12.17
50
405/2019
48,45,262
To be
verified
15.8.17
51
406/2019
28,99,287
15.8.17
27.12.17
52
407/2019
2,04,806
To be
verified
27.12.17
53
408/2019
2,65,120
To be
verified
27.12.17
54
409/2019
11,35,153
To be
verified
31.8.2017
December
2017
55
411/2019
8,25,373/-
2,66,224
VAT
21-7-2017
ER-1
10-7-2017
27-12-2017
9-1-2020
56
541/2019
5,10,153
4,33,761
VAT
16-7-2017
ER-1
19-7-2017
27.12.2017
57
550/2019
22,40,891
To be
verified
27.12.2017
58
887/2019
10,73,350
To be
verified
27.12.2017
59
903/2019
11,25,192
To be
verified
27.12.2017
60
977/2019
12,65,078
65,33,573
August
2017
25.12.2017
25.12.2017
61
1000/2019
89,18,31,760
15,44,848
10.7.17
31.7.17
August 2017
August 2017
27.12.2017
62
1136/2019
3,43,19,951
40,52,969
To be
verified
26.12.2017
63
1147/2019
67,98,005
To be
verified
9.1.2018
18.1.2018/23.1
.2018
64
1178/2019
12,54,328
20-7-2017
27-12-2017
65
1244/2019
17,32,879
ST-3
25.09.2017
21-12-2017
27.12.2017
66
1245/2019
4,43,131
ER-1
19.07.2017
27.12.2017
67
1246/2019
16,06,984
23.09.2017
21-12-2017
27.12.2017
68
1247/2019
16,47,968
23.09.2017
21-12-2017
27.12.2017
69
1255/2019
14,28,504
August 17
13.11.17
Screenshot of
attempt to
upload TRAN
1 available and
invoices have
been
processed
70
362/2020
24,66,545
To be
verified
Manually filed
71
369/2020
16,06,981
7,87,000
10.7.17
27.12.17
72
370/2020
24,58,190
To be
verified
27.12.17
73
377/2020
45,18,280-
To be
verified
27.12.2017
27.12.2017
74
456/2020
19,80,750
10,90,630
To be
verified
14.12.2017
14.12.2017
23.5.2020
75
225/2021
2,82,035
8,52,511
VAT
18.7.2017
23.12.2017
December
2019
76
458/2021
51,19,305
3.7.2017
27.12.2017
and
thereafter.
77
671/2021
9,53,880
9,53,880.07
45,40,588.17
26.12.2017
26.12.2017
78
698/2021
62,10,062.75
62,10,062.75
To be
verified
26.9.2017
26.9.2017
79
722/2020
17,03,981
To be
verified
27.12.2017
80
477/2021
52,54,954
13.7.2017
26.12.2017
26.12.2017
26.5.2020

5. In Writ Tax No. 477 of 2021, the petitioner contends, it filed its return under the Central Excise Act, 1944 on Form ER-1, on 13.07.2017 for the period ending 30.06.2017, disclosing total CENVAT credit available Rs. 52,54,954/-. Also, it submitted electronically its Form GST TRAN-1, for the period ending 30.06.2017, within time granted. Inadvertently, it submitted the figure Rs. 50,702/- as admissible CENVAT in place of the actual entitlement figure Rs. 52,54,954/-. The Form GST TRAN-1 containing the aforesaid error was submitted electronically on 13.07.2017 on the GST portal. Despite best efforts, the petitioner could not submit electronically the revised Form GST TRAN-1 before the cut-off date 27.12.2017 as that function on the GST portal had not been activated or not made fully functional. Besides making unsuccessful attempts to revise the Form GST TRAN-1, manually, the petitioner further claims to have written to the Principal Commissioner CGST on 10.9.2020 and 12.2.2021 to verify the correct amount of ITC available to it and to resolve the issue in favour of the petitioner. Vide communication dated 15.3.2021, the Principal Commissioner CGST refused that resolution since the petitioner’s request was received on 26.05.2020, after expiry of the last date for that purpose, 31.03.2020.

6. In Writ Tax No. 225 of 2021, the petitioner contends, it filed its return under the Central Excise Act, 1944 on Form ER-1 for the period ending 30.06.2017 disclosing ITC available, Rs. 2,82,035/-. The petitioner submitted electronically its Form GST TRAN-1 on 23.12.2017 disclosing Rs. 2,82,035/- ITC availed [in Table no.5(c) of Form TRAN-1]. The balance ITC of eligible duties on inputs held on stocks as on 30.06.2017 was Rs. 8,52,511/-. It was inadvertently filled up in Table no. 7(d) in place of Table no. 7(a) of the Form GST TRAN-1. The petitioner tried to revise the Form GST TRAN-1 but could not succeed due to technical glitches on the GST Portal. Petitioner also claims to have lodged a complaint with the GST Helpdesk on 30.12.2019 as also a grievance on the common portal, on 11.02.2020. On 04.03.2020, the petitioner further claims to have informed the Nodal Officer and the Assistant Commissioner about the inadvertence and requested permission to correct the same. Evidence in support of such claim is on record. However, no relief came to be granted to the petitioner.

7. In Writ Tax No. 872 of 2018, the petitioner claims, it held tax paid stocks for the period ending 30.06.2017 disclosing ITC available, Rs. 16,00,639.74/-. It tried, but could not submit electronically, the Form GST TRAN-1 due to technical glitches on the GST Portal. It admits, there is no evidence available with it, to establish the number of attempts made by it or the date or time when such attempts may have been made – to submit electronically, the Form GST TRAN-1.

8. Largely, all learned counsel for the petitioners have relied on the provisions of Section 140 of the CGST Act and the UPGST Act to contend – upon filing their return under The Central Excise Act, 1944 and/or The Finance Act, 1994 and/or The Uttar Pradesh Value Added Tax Act, 2008, for the period 30.06.2017, a right accrued or vested in their favour, to claim transition ITC under the GST regime. The transition provisions and the Rules framed under the CGST Act and the UPGST Act are only enabling provisions. They govern the procedure to avail such ITC under the CGST Act and/or the UPGST Act. Reference has also been made to Section 174(2)(c) of the CGST Act and the UPGST Act to submit – the right accrued to the petitioners under the repealed law i.e. The Central Excise Act, 1944; The Finance Act, 1994 and; The Uttar Pradesh VAT Act, 2008, stood saved under the CGST Act and the UPGST Act. That substantive right could not be defeated by the procedural law framed and enforced by the delegate of the legislature i.e. the Central Government and the State Government.

9. Alternatively, reliance has been placed on Rule 117 of the Central Goods and Services Tax Rules, 2017 (hereinafter referred to as the ‘CGST Rules’) read with Rule 117 of the Uttar Pradesh Goods and Services Tax Rules, 2017 (hereinafter referred to as the ‘UPGST Rules’) read with Sections 168 and 168A of the CGST Act, to submit – in any case, the time to submit electronically, Form GST TRAN-1 existed up to 31.08.2020 in view of Order no.1 of 2020 issued by the Principal Commissioner GST under Rule 117(1)(a) of the CGST Rules read with notification no. 35 of 2020 read with notification no. 55 of 2020 dated 26.06.2020, both issued under Section 168A of the CGST Act by the CBIC dated 03.04.2020. These orders and notifications have been referred to in conjunction with the statutory provisions whereunder they were issued – to establish the procedural requirement to submit or revise electronically, the Form GST TRAN-1 and/or TRAN-2 (as existed up to 27.12.2017), stood revised and extended up to 31.08.2020. Denial of a real opportunity to submit or revise electronically, the Form GST TRAN-1 and/or TRAN-2, prior to that date, was contrary to law. It is strenuously urged that the extension of time, thus granted, had been obstructed by the executive authorities. They chose to selectively and therefore arbitrarily allow some “registered persons” to submit/revise electronically, the Form GST TRAN-1 and/or TRAN-2, who fulfilled the arbitrary conditions imposed by such authorities.

10. Second, as to the evidence of technical difficulties experienced by the petitioners and the glitches suffered on the GST Portal, it has been submitted, that fact is wholly admitted and documented. First, reference has been made to repeated extensions of time granted by all the statutory authorities and the legislative action taken to extend the timeline to submit Form GST TRAN-1, for that reason. Then reference has been made to Circular no. 39/13/2018-GST dated 03.04.2018 issued by CBIC recognising the existence of such difficulties and efforts made to remedy the wrong. In face of that admission, no further proof or evidence is required, to establish difficulties faced in individual cases. That test, if applied, would lead to arbitrary results and promote hostile discrimination. Last, reference has been made to various decisions of different High Courts, chiefly, the Delhi High Court, Madras High Court, Gujarat High Court, Calcutta High Court, Bombay High Court and Punjab & Haryana High Court, to submit – technical glitches and difficulties faced by different “registered persons”/taxpayers, in submitting/revising/re-revising, electronically, their Form GST TRAN-1 and/or TRAN-2 on the GST portal was not a local phenomenon or a rare event but a common and generic difficulty faced by all “registered persons”/tax payers across the country, while working on the newly designed GST Portal.

11. In the first place, that difficulty arose on account of the switch over required to be made from the plural indirect tax regime (including Central Excise, Service Tax and VAT laws) to the singular GST regime. Second, difficulty arose on account of only one method provided to migrate and merge from the old/plural indirect tax regimes to the new/singular GST regime. While doing so, the executive authorities acted in a manner that was unmindful of the inherent difficulties and challenges faced by the vital stake holders i.e., the “registered persons”/taxpayers and tax professionals and tax authorities. Third all such “registered persons”/taxpayers and tax professionals had not migrated to online or digitized platform, before 30.06.2017. Fourth, the newly devised GST Portal was hurriedly activated, leading to multiple teething as also genuine technical and other difficulties faced by all including the CGST & UPGST authorities. Since the existence of such technical and other difficulties and glitches is admitted or indisputably established, no further burden exists on the individual “registered person”/taxpayer/petitioner to establish the extent of difficulty faced by each such person or to establish strict proof that the Form GST TRAN-1 and/or TRAN-2 could not be submitted or revised or re-revised electronically, for reason of that difficulty.

12. Shri Shubham Agarwal (in Writ Tax No. 477 of 2021) has placed reliance on the decisions of the Delhi High Court in R.R. Distributors Pvt. Ltd. Vs. Commissioner of Central Tax, GST, Delhi North & Anr., WP (C) No. 4143/2020, decided on 27.05.2021 wherein, following its earlier decision in Blue Bird Pure Pvt. Ltd. Vs. Union of India & Ors., 2019 SCC OnLine Del 9250, the Delhi High Court held – inadvertent and genuine mistakes in filling up of credit in Form GST TRAN-1 should not preclude tax payers from having their claims examined in accordance with law. That Court further opined, non-filling of Part VII-B of Table no. 7(a) and 7(d) of Form GST TRAN-1 could not impair the rights of the assessee to claim transition ITC. It further recognized – at the relevant time, the GSTN system was in a trial-and-error phase and that from the beginning, the GST Network threw up difficulties in filling up returns etc., on the GST Portal. He has also relied on a decision made on similar lines, pronounced by the Madras High Court in M/s Carlstahl Craftsman Enterprises Private Limited Vs. Union of India & 3 Ors., W.P. No. 11119/2020 dated 23.4.2020, and another decision of that High Court in M/s Bharat Electronics Limited Vs. Commissioner of GST & Central Excise and 3 Ors., W.P. No. 2937 of 2019 dated 21.6.2021, wherein the multiple difficulties faced by the taxpayers in filling up and submitting electronically Form GST TRAN-1 were recognized. He also relied upon the decision of the Gujarat High Court in Jakap Metind Pvt. Ltd. Vs. Union of India, 2019 (31) GSTL 422 (Guj.) and Siddharth Enterprises Vs. Nodal Officer, 2019 (29) GSTL 664 (Guj.) to submit that in similar circumstances, the Gujarat High Court has also taken the same view as taken by the Delhi High Court while allowing the Form GSTN TRAN-1 to be revised. Last, reliance has also been placed on the decision of the Punjab & Haryana High Court in Adfert Technologies Pvt. Ltd. Vs. Union of India & Ors., CWP No. 30949 of 2018, dated 04.11.2019.

13. Shri Nishant Mishra (in Writ Tax No. 225 of 2021), has, besides adopting the submissions of Shri Shubham Agarwal, further submitted – under Rule 121 of the CGST Rules and the UPGST Rules, the assessing authority is obligated to verify the correct amount of ITC available. Thus, it is his submission, even if some inadequacies or errors or deficiencies may be attributed to the conduct of the “registered persons”/ taxpayers/petitioners, yet, ITC being a vested statutory right, the statutory authorities would remain obligated to make due verification of the actual amount of carry forward ITC available to such persons, by looking at their returns filed under the Central Excise Act and/or the Service Tax law and/or the UP VAT Act, 2007, for the period ended 30.06.2017. So long as that/those return/s may be found to have been filed within time and so long as there is nothing to doubt the correctness of the CENVAT or ITC disclosed in that/those return/s, the authority would have to allow such “registered person” the benefit of the ITC under the CGST Act and the UPGST Act, accordingly. In that regard, he has relied upon a decision of the Supreme Court in Commissioner of Income Tax, Delhi Vs. Mahalaxmi Sugar Mills Co. Ltd., (1986) 3 SCC 544.

14. He would further submit, there is a difference between the act of revision and correction in a return. By revision, a “registered person” may change the nature and character of the disclosures made in the original return. However, by a simple correction in its return, the “registered person” only corrects the disclosure made in Table no.7(a) and 7(d) of the Form GST TRAN-1. It would relate back to the original form submitted by the petitioner. He has relied upon the decision of the Delhi High Court in SKH Sheet Metal Components Vs. Union of India & Ors., (2020) 38 GSTL 592 (Del). He has also relied on a decision of this Court in Dhampur Sugar Mills Ltd. Vs Commissioner of Income-Tax, Delhi Central, (1973) 90 ITR 236 to submit that an error in Form GST TRAN-1 should be allowed to be corrected, at any time.

15. As to the submission advanced by Sri Nishant Mishra, relying on the decision in Commissioner of Income Tax Vs. Mahalaxmi Sugar Mills Co. Ltd. (supra), the precise issue was whether the business loss incurred in India could be set off against dividend income accrued in Pakistan, in the context of Section 24(1) of the Indian Income Tax Act, 1922. The issue was decided on the strength of the language of that statutory provision under that Act.

16. In the present case, the duty on the statutory authorities to examine the correctness of the claim of ITC would arise only upon submission of declaration on Form GST TRAN-1. We find no statutory basis to obligate the statutory authorities to grant benefit of ITC in absence of such declaration. For that reason, we find the ratio in the aforesaid decision to be inapplicable to the facts and law in the present case.

17. As to the other submission advanced by Sri Mishra, relying on Dhampur Sugar Mills Ltd. (supra), there could be no dispute that a correction made in the return or declaration filed by a “registered person”/taxpayer would relate back to the date of filing of the original return/declaration. However, the issue here is whether the petitioners continues to be entitled to submit and/or correct their return/declaration on Form GST TRAN-1 and/or TRAN-2. Plainly, the ratio of the decision in the case of Dhampur Sugar Mills Ltd. (supra) is not relevant at the present stage.

18. Shri Praveen Kumar (in Writ Tax No. 872 of 2018) has also adopted the submissions advanced by Shri Agarwal and Shri Mishra. He has further emphasised that the right to claim ITC is a vested right. Relying upon the decision of the Gujarat High Court in Siddharth Enterprises Vs. Nodal Officer, 2019 (29) GSTL 664 (Guj.), he would submit, that right could not be defeated by a defective procedure devised and enforced by the rule making body. Also, he has relied on the decision of Supreme Court in State of Mysore & Ors. Vs. Mallick Hashim & Co., (1974) 3 SCC 251, to submit, time prescription could not have been made by the rule making body while making rule prescribing the Form GST TRAN-1.

19. Shri Manish Goyal, learned Additional Advocate General has relied on the language of Section 140 of the CGST Act to submit, no vested right ever accrued to the petitioners to avail ITC under the CGST or UPGST Act. The transition ITC was only a concession granted. It could be availed only in the event of Form GST TRAN-1 being submitted electronically within time and in the manner prescribed by the Rules framed under the CGST Act. Since some of the petitioners did not submit their original or revised Form GST TRAN-1, electronically, within the time and in manner prescribed, no right to carry forward ITC, as on 30.06.2017 ever accrued to them. Such of the petitioners who could file their Form GST TRAN-1 but did not revise or re-revise it within time granted, cannot complain as they would be allowed ITC up to the limit of the disclosure made by them in their original Form GST TRAN-1. To bolster that submission, learned Additional Advocate General has referred to the provisions of Section 140 of the CGST Act together with all its sub-sections, to highlight the different contingencies contemplated under each of the sub-section.

20. He has further submitted – transition provision such as Section 140 of the CGST Act & the UPGST Act is a special provision. It has a temporary enforcement. It exhausts upon the special circumstance (for which it was incorporated), coming to an end. He relies on Britnell Vs. Secretary of State for Social Security, (1991) 2 All ER 726. Also, relying on the majority opinion in the Constitution Bench decision of the Supreme Court in K.S. Paripoornan Vs. State of Kerala & Ors., (1994) 5 SCC 593, he would submit, such a transition provision must be read keeping in mind the mischief sought to be addressed by the legislature while enforcing the substantive law, during the period of transition. He has also relied on the decision of the Supreme Court in Jayam & Company Vs. Assistant Commissioner (CT) & Anr. (2016) 15 SCC 125 and ALD Automotive Pvt. Ltd. Vs. Commercial Tax Officer & Ors., 2018 (364) ELT 3 (SC) to submit, CENVAT and/or ITC carry forward as on 30.06.2017 was not a vested right but, only a concession granted in law.

21. The submissions advanced by the learned Additional Advocate General have been adopted by the learned Additional Solicitor General of India and other counsel of the CGST authorities. Shri Krishna Ji Shukla, learned counsel for the Union of India also placed reliance on the decision of the Madras High Court in M/s P.R. Mani Electronics Vs. Union of India & Anr., (2020) 7 MLJ 605.

22. Having heard learned counsel for the parties and having given our anxious consideration to the issues raised, we find, principally, three submissions are required to be dealt with. The first issue for consideration is whether the ITC is a vested right under the GST regime. This issue arises in the context of transition provisions enacted under the CGST Act read with the CGST Rules. Section 140 of that Act, reads as under:

“140. transition 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 of eligible duties 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 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 credit was admissible as CENVAT credit under the existing law and is also admissible as input tax credit under this Act.

Explanation: For the purposes of this sub-section, the expression “unavailed CENVAT credit” means the amount that remains after subtracting the amount of CENVAT credit already availed in respect of capital goods by the taxable person under the existing law from the aggregate amount of CENVAT credit to which the said person was entitled in respect of the said capital goods under the existing law.

(3) 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 provision of exempted services, or who was providing works contract service and was availing of the benefit of notification No. 26/2012-Service Tax, dated the 20th June, 2012 or a first stage dealer or a second stage dealer or a registered importer or a depot of a manufacturer, shall be entitled to take, in his electronic credit ledger, credit of eligible duties in respect of inputs held in stock and inputs contained in semi­finished or finished goods held in stock on the appointed day subject to goods held in stock on the appointed day, within such time and in such manner as may be prescribed, subject to the following conditions, namely:–

(i) such inputs or goods are used or intended to be used for making taxable supplies under this Act;

(ii) the said registered person is eligible for input tax credit on such inputs under this Act;

(iii) the said registered person is in possession of invoice or other prescribed documents evidencing payment of duty under the existing law in respect of such inputs;

(iv) such invoices or other prescribed documents were issued not earlier than twelve months immediately preceding the appointed day; and

(v) the supplier of services is not eligible for any abatement under this Act:

Provided that where a registered person, other than a manufacturer or a supplier of services, is not in possession of an invoice or any other documents evidencing payment of duty in respect of inputs, then, such registered person shall, subject to such conditions, limitations and safeguards as may be prescribed, including that the said taxable person shall pass on the benefit of such credit by way of reduced prices to the recipient, be allowed to take credit at such rate and in such 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 or provision of taxable as well as exempted services under Chapter V of the Finance Act, 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 existing law, within such time and in such manner as may be prescribed subject to the condition that the invoice or any other duty or tax paying document of the same was recorded in the books of account of such person within a period of thirty days from the appointed day:

Provided that the period of thirty days may, on sufficient cause being shown, be extended by the Commissioner for a further period not exceeding thirty days:

Provided further that said registered person shall furnish a statement, in such manner as may be prescribed, in respect of credit that has been taken under this sub-section.

(6) A registered person, who was either paying tax at a fixed rate or paying a fixed amount in lieu of the tax payable under the existing law shall be entitled to take, in his electronic credit ledger, 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 subject to goods held in stock on the appointed day, within such time and in such manner as may be prescribed, subject to the following conditions, namely:-

(i) such inputs or goods are used or intended to be used for making taxable supplies under this Act;

(ii) the said registered person is not paying tax under section 10;

(iii) the said registered person is eligible for input tax credit on such inputs under this Act;

(iv)the said registered person is in possession of invoice or other prescribed documents evidencing payment of duty under the existing law in respect of inputs; and

(v) such invoices or other prescribed documents were issued not earlier than twelve months immediately preceding the appointed day.

(7) Notwithstanding anything to the contrary contained in this Act, the input tax credit on account of any services received prior to the appointed day by an Input Service Distributor shall be eligible for distribution as credit under this Act even if credit under this Act, within such time and in such manner as may be prescribed, even if the invoices relating to such services are received on or after the appointed day.

(8) Where a registered person having centralised registration under the existing law has obtained a registration under this Act, such person shall be allowed to take, in his electronic credit ledger, credit of the amount of CENVAT credit carried forward in a return, furnished under the existing law by him, in respect of the period ending with the day immediately preceding the appointed day in such manner 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 subject to 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 three months from the appointed day.

(10) The amount of credit under sub-sections (1), (3), (4) and (6) shall be calculated in such manner as may be prescribed.

Explanation 1: For the purposes of sub-sections (3), (4) and (6), the expression “eligible duties” means–

(i) the additional duty of excise leviable under section 3 of the Additional Duties of Excise (Goods of Special Importance) Act, 1957;

(ii) the additional duty leviable under sub-section (1) of section 3 of the Customs Tariff Act, 1975;

(iii)the additional duty leviable under sub-section (5) of section 3 of the Customs Tariff Act, 1975;

(iv) omitted

(v) the duty of excise specified in the First Schedule to the Central Excise Tariff Act, 1985;

(vi) the duty of excise specified in the Second Schedule to the Central Excise Tariff Act, 1985; and

(vii) the National Calamity Contingent Duty leviable under section 136 of the Finance Act, 2001, in respect of inputs held in stock and inputs contained in semi-finished or finished goods held in stock on the appointed day.

Explanation 2: For the purposes of Sub-sections (1) and (5), the expression “eligible duties and taxes” means–

(i) the additional duty of excise leviable under section 3 of the Additional Duties of Excise (Goods of Special Importance) Act, 1957;

(ii) the additional duty leviable under sub-section (1) of section 3 of the Customs Tariff Act, 1975;

(iii)the additional duty leviable under sub-section (5) of section 3 of the Customs Tariff Act, 1975;

(iv) omitted

(v) the duty of excise specified in the First Schedule to the Central Excise Tariff Act, 1985;

(vi) the duty of excise specified in the Second Schedule to the Central Excise Tariff Act, 1985;

(vii) the National Calamity Contingent Duty leviable under section 136 of the Finance Act, 2001; and

(viii) the service tax leviable under section 66B of the Finance Act, 1994, in respect of inputs and input services 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.”

23. In the first place, as rightly claimed by the Additional Advocate General, Section 140 of the CGST Act & UPGST Act is a transition provision. It was incorporated to cater to the special circumstances arising upon replacement of the pre-existing plural indirect tax regime, by a singular indirect tax regime. Transactions had been performed under the pre-existing laws and tax paid thereon. Such transactions gave rise to CENVAT and ITC under the pre-existing laws. The legislature did not intend to nullify those credits earned under the pre-existing laws, rather, it intended to transition those credits to the GST regime. That appears to be the plain object and intent, of section 140 of the CGST & UPGST Acts. It has also allowed ITC to unregistered dealers under the pre­existing laws, on tax paid inputs, stocks etc., on the strength of Tax Invoices.

24. Plainly, after the repeal of the pre-existing laws, such an exercise could only be a one-time affair. Once completed, no circumstance would exist or arise as may require or permit a repeat action of that kind. Therefore, the provision is purely temporary, to allow migration from the pre-existing plural tax regime to the singular GST regime. It mitigates the hardship and financial loss that would otherwise visit the ‘registered persons’ if the CENVAT and/or ITC earned under the pre-existing indirect tax laws were annulled or lost upon enforcement of the GST law.

25. Thus, under sub-section (1) of Section 140 of the Act, a “registered person”, other than one opting to pay tax by way of composition levy (under Section 10 of the CGST Act) has been made entitled to take benefit of any CENVAT credit of eligible duties that may have been carried forward on 30 June 2017. However, by virtue of the plain language of Section 140 of the Act, that right is subject (mainly) to fulfilment of two conditions, namely, the return for such CENVAT credit of eligible duty and/or VAT ITC should have been furnished by a “registered person” under the pre-existing law/s. In case such person was not registered under the pre-existing laws, he may avail ITC on tax paid inputs, stocks etc., against Tax Invoices. Second, compliance of time and manner prescribed, is required to be fulfilled. Importantly, the words “within such time and” have been inserted by Finance Act, 2020, with full retrospective effect from 01.07.2013.

26. Insofar as the first condition is concerned, there is little difficulty in the present batch of cases since all petitioners claim to have filed their return of CENVAT credit, to carry forward CENVAT and/or VAT ITC for the period ending 30 June 2017 or they claim ITC on tax paid inputs, stocks etc., against Tax Invoices held by them. Many petitioners have disclosed the date of filing of the return, in their writ petition. The same has not been disputed by the revenue authorities. In other cases, though such returns are claimed to have been filed, that date of filing has not been disclosed. Yet, it is not the submission of the revenue authorities (in any case) that any petitioner had not filed its return either for the CENVAT or the ITC credit brought forward, for the period ending 30 June 2017. In any case, that eligibility condition may remain to be verified on facts, by the statutory authorities. A similar position exists with respect to the ITC arising under the U.P.V.A.T. Act, 2017, carried forward, for the period ending 30 June 2017.

27. As to the second eligibility condition, the parties are at variance – whether the stipulation of timeline and manner prescribed, appearing at the end of sub-section (1) of Section 140 relates to the return to be filed under the pre-existing/repealed law/s or it pertains to the transition required to be made upon enforcement of the CGST and UPGST enactments – to avail the CENVAT and ITC brought forward, for the period ending 30 June 2017.

28. The CGST Act and the UPGST Act, pertain to and lay down the law under the GST regime. By virtue of Section 174 of the CGST Act, the provisions of the Central Excise Act, 1944 and/or other Acts pertaining to imposition of like duties, have been specifically repealed. Similarly, by virtue of Section 174 of the UPGST Act, the provisions of the U.P.V.A.T. Act, 2008 have been specifically repealed. The new Act and the Rules framed thereunder only provide for the mode and rules of procedure to file returns, documents etc. Looked at in this light, the words ‘within such time and in such manner as may be prescribed’ must be read in the context of things required to be done under the CGST/UPGST law, only.

29. To read those words in conjunction with the stipulations made under the pre-existing/repealed laws would be to attribute superfluity and redundancy to the words used by the Parliament and the State Legislature, while enacting the GST laws. That may never be done.

Then, under the old law, the time limits, procedure and method were already prescribed – to furnish any information, declaration or return. No fresh prescription was required or has been made under the GST regime, with respect to those laws. The pre-existing laws having been repealed. Hence, there is no warrant to accept the contention advanced by Shri Praveen Kumar, learned counsel for the petitioner, that Section 140 of the CGST Act and the UPGST Act, prescribed that manner, procedure, and timeline, to be adhered to under the pre-existing/repealed laws.

30. Clearly, while enacting the GST law, the Parliament and the State Legislature were conscious of the duties and obligations created under the new law. It is those obligations for which timeline and manner has been prescribed. Therefore, the condition within such time and within such manner, must be read only in conjunction with the right to avail entitlement to take into the Electronic Credit Ledger, the amount of CENVAT credit or ITC.

31. The submission of the learned Additional Advocate General that the CENVAT or ITC either under the pre-existing/repealed law or under the new law is only in the nature of a concession made, even if correct, may not be decisive of the dispute before us. We observe, the carry forward CENVAT and ITC under the pre-existing laws would remain a statutory entitlement. It may be taken credit in the Electronic Credit Ledger, under the new GST regime. However, it would remain subject to the fulfilment of the twin conditions noted above and the further conditions arising under the proviso to section 140(1) of the CGST Act.

32. Thus, the right to avail ITC did not get vested on the petitioners upon their filing returns under the pre-existing laws. The petitioners were obligated to perform further act under the new laws i.e., CGST Act and the UPGST Act – to submit electronically, Form GST TRAN-1 and/or TRAN-2, before they could carry that credit to their Electronic Credit Ledger.

33. To complete our discussion, it may further be noted – the exact nature of the CENVAT/ITC, would always depend upon the language of the provisions and scheme of the enactment whereunder that question may arise. Therefore, though the decisions relied upon by learned Additional Advocate General do appear to lay down, by way of a principle, that ITC is not a vested right but merely a concession, at the same time, we cannot overlook the fact that those decisions arose under different laws.

34. To clarify, we observe – a pure concession such as a set-off may be granted under a law, as a discretion or benefit or relaxation, in certain circumstances, for the benefit of some, on an objective classification, by the legislature. However, under the CGST Act and the UPGST Act, ITC is the legislative doctrine arising or springing from a fiscal policy or a modern taxation concept applied by the legislature, where under any tax paid at each link of the chain (in a chain of transactions) must not add to the chain, by way of tax burden, more than the tax that would arise on the value addition caused at that link of the chain. The principle involves both, an affirmation of charge of tax at every value addition and negation of double taxation on one value addition.

35. Therefore, it may not be empirically correct to contend that CENVAT or ITC is a pure concession as concessions do not necessarily spring from a conceptual base to tax value addition. However, that principle may be relevant only to determine the ITC arising against transactions performed after enforcement of the GST regime i.e., post 01.07.2017. It may not be true of past/earlier transactions arising under the pre-existing/repealed laws, in the context of pure transition provision. To that extent and for that reason, we respectfully disagree with the contrary view taken by Gujarat High Court in Siddharth Enterprises (supra), to the extent it has been held therein that the ITC became a vested right upon that return being filed under the erstwhile law i.e., the Central Excise Act and the State Sales Tax/VAT Act.

36. That being our opinion, we do not consider it necessary to express any definite opinion as to applicability of the ratio laid down by the Supreme Court in the decisions in Jayam & Company Vs Assistant Commissioner (CT) and Another (supra) and ALD Automotive Pvt. Ltd. Vs Commercial Tax Officer & Ors. (supra). The issue before us may be dealt with, as below.

37. Coming back to the Scheme of the Act, we find, Section 164 of the CGST Act and the UPGST Act empowers the Union and the State Governments to make Rules on matters required to be or that may be prescribed or in respect of which provisions are to be or may be made. Therefore, Rule 117 of the CGST Rules clearly appears to be a rule made to give effect to the transition provisions of the Act. It provides for filing/revision electronically, of Form GST TRAN-1 and/or TRAN-2, to obtain credit of ITC. In this regard, the provisions of Rule 117 read as under:

“117. Tax or duty credit carried forward under any existing law or on goods held in stock on the appointed day.- (1) Every registered person entitled to take credit of input tax under Section 140 shall, within ninety days of the appointed day, submit a declaration electronically in FORM G.S.T. T.R.A.N.-1, duly signed, on the Common Portal specifying therein, separately, the amount of input tax credit [x x x] to which he is entitled under the provisions of the said section:

Provided that the Commissioner may, on the recommendations of the Council, extend the period of ninety days by a further period not exceeding ninety days:

Provided that in the case of a claim under sub-section (1) of Section 140, the application shall specify separately-

(i) the value of claims under Section 3, sub-section (3) of Section 5, Sections 6 and 6A and sub-section (8) of Section 8 of the Central Sales Tax Act, 1956 made by the applicant; and

(ii) the serial number and value of declarations in Forms C or F and certificates in Forms E or H or Form I specified in Rule 12 of the Central Sales Tax (Registration and Turnover) Rules, 1957 submitted by the applicant in support of the claims referred to in sub-clause (I);

[(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, 2019, in respect of registered persons who could not submit the said declaration by the due date on account of technical difficulties on the common portal and in respect of whom the Council has made a recommendation for such extension.]

(2) Every declaration under sub-rule (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 utilised 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 utilised 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 sub­section (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 entry tax] charged by the supplier in respect of the goods or services; and

(v)the date on which the receipt of goods or services is entered in the books of account of the recipient.

(3) The amount of credit specified in the application in FORM G.S.T. T.R.A.N.-1 shall be credited to the electronic credit ledger of the applicant maintained in FORM G.S.T. P.M.T.-2 on the Common Portal.

(4) (a)(i) A registered person, holding stock of goods which have suffered tax at the first point of their sale in the State and the subsequent sales of which are not subject to tax in the State availing credit in accordance with the proviso to sub-section (3) of Section 140 shall be allowed to avail input tax credit on goods held in stock on the appointed day in respect of which he is not in possession of any document evidencing payment of value added tax.

(ii) The credit referred to in sub-clause (i) shall be allowed at the rate of sixty per cent. on such goods which attract State tax at the rate of nine per cent, or more and forty per cent, for other goods of the State tax applicable on supply of such goods after the appointed date and shall be credited after the State 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;

(iii) The scheme shall be available for six tax periods from the appointed date.

(b) The credit of State tax shall be availed subject to satisfying the following conditions, namely:

(i) such goods were not wholly exempt from tax under the (Name of the State) Value Added Tax Act; ….

(ii) the document for procurement of such goods is available with the registered person;

[(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 G.S.T. T.R.A.N.-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 the declaration in FORM GST TRAN-1 in accordance with sub-rule (1A), may submit the statement in FORM GST TRAN-2 by 30th April, 2019.]

(iv) the amount of credit allowed shall be credited to the electronic credit ledger of the applicant maintained in FORM G.S.T. P.M.T.-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.”

38. Thus, a detailed procedure has been prescribed to submit/revise/re-revise electronically, Form GST TRAN-1/TRAN-2 with respect to CENVAT/ITC carried forward for the period ending 30.06.2017. It is only upon such Form being submitted electronically, in the manner prescribed that the right to carry forward such credit to the Electronic Credit Ledger would arise. Unless this vital procedural step is taken, the petitioner can never claim a accrual of a vested right to transition ITC.

39. Coming to the alternative submission advanced by learned counsel for the petitioners, it is seen, Rule 117(1) of the CGST Rules lays down a period of 90 days from the appointed date (01.07.2017), to submit electronically, the declaration on Form GST TRAN-1. That period could be extended by a further period of 90 days, by the Commissioner on the recommendation of the GST Council. As a fact, extension was granted up to 27.12.2017. Thereafter, by virtue of the CGST (Amendment) Rules 2020 and introduction of sub-Rule 1A of Rule 117 to the CGST Rules, 2017, the Commissioner was further empowered to act on the recommendation of the GST Council and extend the time limit – to submit the Form GST TRAN-1, electronically, up to 31.03.2020. Again, as a fact, that extension was granted vide Order no.01/2020/GST dated 07.02.2020. It reads as below:

F. No. CBEC-20/06/17/2018-GST (Pt. I)

Government of India
Ministry of Finance
(Department of Revenue)
[Central Board of Indirect Taxes and Customs]

***

New Delhi, the 7th February, 2020

Order No. 01/2020-GST

Subject: Extension of time limit for submitting the declaration in FORM GST TRAN-1 under rule 117(1A) of the Central Goods and Service Tax Rules, 2017 in certain cases

In exercise of the powers conferred by sub-rule (lA) of rule 117 of the Central Goods and Services Tax Rules, 2017 read with section 168 of the Central Goods and Services Tax Act, 2017, on the recommendations of the Council, and in supersession of Order No. 01/2019-GST dated 31.01.2019, except as respects things done or omitted to be done before such supersession, the Commissioner hereby extends the period for submitting the declaration in FORM GSTTRAN-1 till 31st March, 2020, for the class of registered persons who could not submit the said declaration by the due date on account of technical difficulties on the common portal and whose cases have been recommended by the Council. Sd/-07.02.2020 (Yogen a Garg) Principal Commissioner (GST)

40. The matter does not end here. Later, the Parliament introduced Section 168A to the CGST Act. It reads as below:

“168A – Power of Government to extend time limit in special circumstances.

(1) Notwithstanding anything contained in this Act, the Government may, on the recommendations of the Council, by notification, extend the time limit specified in, or prescribed or notified under, this Act in respect of actions which cannot be completed or complied with due to force majeure.

(2) The power to issue notification under sub-section (1) shall include the power to give retrospective effect to such notification from the date not earlier than the date of commencement of this Act.

Explanation.— For the purposes of this section, the expression “force majeure” means a case of war, epidemic, flood, drought, fire, cyclone, earthquake or any other calamity caused by nature or otherwise, affecting the implementation of any of the provisions of this Act.”

41. In exercise of the above power, thus vested, the Central Government, by its notification no.35 of 2020 dated 03.04.2020, granted extension upto 30.06.2021 to file forms, declarations and returns etc. specified or prescribed in or notified under the CGST Act during the period 20.3.2020 to 29.06.2020. The said notification reads as below:

“Government of India

Ministry of Finance
(Department of Revenue)
Central Board of Indirect Taxes and Customs
Notification No. 35/2020 – Central Tax

New Delhi, the 3rd April, 2020

G.S.R. (E).– In exercise of the powers conferred by section 168A of the Central Goods and Services Tax Act, 2017 (12 of 2017) (hereafter in this notification referred to as the said Act), read with section 20 of the Integrated Goods and Services Tax Act, 2017 (13 of 2017), and section 21 of Union Territory Goods and Services Tax Act, 2017 (14 of 2017), in view of the spread of pandemic COVID-19 across many countries of the world including India, the Government, on the recommendations of the Council, hereby notifies, as under,-

(i) where, any time limit for completion or compliance of any action, by any authority or by any person, has been specified in, or prescribed or notified under the said Act, which falls during the period from the 20th day of March, 2020 to the 29th day of June, 2020, and where completion or compliance of such action has not been made within such time, then, the time limit for completion or compliance of such action, shall be extended upto the 30th day of June, 2020, including for the purposes of–

(a) completion of any proceeding or passing of any order or issuance of any notice, intimation, notification, sanction or approval or such other action, by whatever name called, by any authority, commission or tribunal, by whatever name called, under the provisions of the Acts stated above; or

(b) filing of any appeal, reply or application or furnishing of any report, document, return, statement or such other record, by whatever name called, under the provisions of the Acts stated above; but, such extension of time shall not be applicable for the compliances of the provisions of the said Act, as mentioned below –

(a) Chapter IV;

(b) sub-section (3) of section 10, sections 25, 27, 31, 37, 47, 50, 69, 90, 122, 129;

(c) section 39, except sub-section (3), (4) and (5);(d) section 68, in so far as e-way bill is concerned; and (e) rules made under the provisions specified at clause (a) to (d) above;

(ii) where an e-way bill has been generated under rule 138 of the Central Goods and Services Tax Rules, 2017 and its period of validity expires during the period 20th day of March, 2020 to 15 th day of April, 2020, the validity period of such e-way bill shall be deemed to have been extended till the 30th day of April, 2020.

2. This notification shall come into force with effect from the 20th day of March, 2020.

[F. No. CBEC-20/06/04/2020-GST]

(Pramod Kumar)

Director, Government of India”

42. Again, on 27.06.2020, the Central Government issued notification no.55 of 2020 under Section 168A of the CGST Act to further extend the time extended (earlier) under its notification no. 35 of 2020 dated 3.4.2020, up to 31.8.2020 – with respect to any acts specified in or prescribed or notified under in respect of the CGST Act, up to 31.08.2020.

43. Thus, the time limit under Section 140(1) of the CGST Act read with Rule 117 of the CGST Rules 2017 and parallel provisions under the State law (to submit Form TRAN-1/TRAN-2 electronically, within 90 days from the appointed date), was the time limit specified in or prescribed by those enactments. Therefore, even if reference to Section 140 has not been specifically made in any of the orders and notifications issued under Rule 117(1), Rule 117(1)A or Section 140A or Section 168A still, undeniably, the time limit to submit electronically Form GST TRAN-1/TRAN-2 stood extended in accordance with law, up to 31.08.2020. No contrary provision of law, either statutory or delegated, has been shown to exist as may warrant a different construction to be made to the exercise of powers made by the Commissioner CGST or of the CBIC or the Central Government, acting either on their own or on the recommendation of the CBIC or the GST Council.

44. Having reached that conclusion, it survives for consideration whether the petitioners had made out a case to submit/revise/re-revise, electronically, the Form GST TRAN-1/TRAN-2, within time as stood extended upto 31.8.2020. Here, we find, the matter has matured for our consideration after a long lapse of time. Thus, we have the benefit of not only the decisions of other High Courts wherein similar submissions had been considered but also the opportunity to observe the conduct of the statutory authorities themselves, to test how they had looked at and reacted to the situation as had developed on or after 01.07.2017, with respect to the transition to be made from the erstwhile plural indirect tax regime to the singular GST regime.

45. While the petitioners had been clamouring as to the technical difficulties and glitches or obstructions faced by them in submitting/revising the Form GST TRAN-1/TRAN-2 electronically, we may not be required to rule on those pleadings with suspicion, in view of the stand that has been taken by the CBIC itself, as reflected in its Circular letter dated 3 April 2018. We are aware, the said Circular does not directly concern itself with the extension of time and the latitude to be granted to the “registered person”, to submit/revise electronically, the Form GST TRAN-1/TRAN-2. However, that Circular was issued on 3 April 2018, i.e., beyond nine months after the introduction of the GST regime. The recital of the background facts and the modalities offered, are clearly noteworthy. We, therefore, extract the entire circular as below:

“Circular No. 39/13/2018-GST

F. No. 267/7/2018-CX.8
Government of India
Ministry of Finance
Department of Revenue
Central Board of Indirect Taxes and Customs

New Delhi, dated the 3 rd April, 2018

To

The Principal Chief Commissioners/ Chief Commissioners/ Principal Commissioners/
Commissioner of Central Tax (All),
The Principal Director Generals/ Director Generals (All).

Sub: Setting up of an IT Grievance Redressal Mechanism to address the grievances of taxpayers due to technical glitches on GST Portal-reg.

Madam/Sir,

It has been decided to put in place an IT-Grievance Redressal Mechanism to address the difficulties faced by a section of taxpayers owing to technical glitches on the GST Portal and the relief that needs to be given to them. The relief could be in the nature of allowing filing of any Form or Return prescribed in law or amending any Form or Return already filed. The details of the said grievance redressal mechanism are provided below:

2. Introduction

Where an IT related glitch has been identified as the reason for failure of a class of taxpayer in filing of a return or a form within the time limit prescribed in the law and there are collateral evidences available to establish that the taxpayer has made bonafide attempt to comply with the process of filing of form or return, GST Council has delegated powers to the IT Grievance Redressal Committee to approve and recommend to the GSTN the steps to be

taken to redress the grievance and the procedure to be followed for implementation of the decision.

3. Scope

Problems which are proposed to be addressed through this mechanism would essentially be those which relate to Common Portal (GST Portal) and affect a large section of taxpayers.

Where the problem relates to individual taxpayers, due to localised issue such as non-availability of internet connectivity or failure of power supply, this mechanism shall not be available.

4. IT-Grievance Redressal Committee

Any issue which needs to be addressed through this mechanism shall be identified by GSTN and the method of resolution approved by the GST Implementation Committee (GIC) which shall act as the IT Grievance Redressal Committee. In GIC meetings convened to address IT issues or IT glitches, the CEO, GSTN and the DG (Systems), CBEC shall participate in these meetings as special invitees.

5. Nodal officers and identification of issues

5.1 GSTN, Central and State government would appoint nodal officers in requisite number to address the problem a taxpayer faces due to glitches, if any, in the Common Portal. This would be publicized adequately.

5.2 Taxpayers shall make an application to the field officers or the nodal officers where there was a demonstrable glitch on the Common Portal in relation to an identified issue, due to which the due process as envisaged in law could not be completed on the Common Portal.

5.3 Such an application shall enclose evidences as may be needed for an identified issue to establish bonafide attempt on the part of the taxpayer to comply with the due process of law.

5.4 These applications shall be collated by the nodal officer and forwarded to GSTN who would on receipt of application examine the same. GSTN shall after verifying its electronic records and the applications received, identify the issue involved where a large section of tax-payers are affected. GSTN shall forward the same to the IT Grievance Redressal Committee with suggested solutions for resolution of the problem.

6. Suggested solutions

6.1 GST Council Secretariat shall obtain inputs of the Law Committee, where necessary, on the proposal of the GSTN and call meeting of GIC to examine the proposal and take decision thereon.

6.2 The committee shall examine and approve the suggested solution with such modifications as may be necessary.

6.3 IT-Grievance Redressal Committee may give directions as necessary to GSTN and field formations of the tax administrations for implementation of the decision.

7. Legal issues

7.1 Where an IT related glitch has been identified as the reason for failure of a taxpayer in filing of a return or form prescribed in the law, the consequential fine and penalty would also be required to be waived. GST Council has delegated the power to the IT Grievance Redressal Committee to recommend waiver of fine or penalty, in case of an emergency, to the Government in terms of section 128 of the CGST Act, 2017 under such mitigating circumstances as are identified by the committee. All such notifications waiving fine or penalty shall be placed before GST Council.

7.2 Where adequate time is available, the issue of waiver of fee and penalty shall be placed before the GST Council with recommendation of the IT-Grievance Redressal Committee.

8. Resolution of stuck TRAN-1s and filing of GSTR-3B

8.1 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 authenticate the TRAN-1s due to IT related glitches. As a result, a large number of such TRAN-1s are stuck in the system. GSTN shall identify such taxpayers who could not file TRAN-1 on the basis of electronic audit trail. It has been decided that all such taxpayers, who tried but were not able to complete TRAN-1 procedure (original or revised) of filing them on or before 27.12.2017 due to IT-glitch, shall be provided the facility to complete TRAN-1 filing. It is clarified that the last date for filing of TRAN 1 is not being extended in general and only these identified taxpayers shall be allowed to complete the process of filing TRAN-1.

8.2 The taxpayer shall not be allowed to amend the amount of credit in TRAN-1 during this process vis-à-vis the amount of credit which was recorded by the taxpayer in the TRAN-1, which could not be filed. If needed, GSTN may request field formations of Centre and State to collect additional document/ data etc. or verify the same to identify taxpayers who should be allowed this procedure.

8.3 GSTN shall communicate directly with the taxpayers in this regard and submit a final report to GIC about the number of TRAN-1s filed and submitted through this process.

8.4 The taxpayers shall complete the process of filing of TRAN 1 stuck due to IT glitches, as discussed above, by 30th April 2018 and the process of completing filing of GSTR 3B which could not be filed for such TRAN 1 shall be completed by 31st May 2018.

9. The decisions of the Hon’ble High Courts of Allahabad, Bombay etc., where no case specific decision has been taken, may be implemented in-line with the procedure prescribed above, subject to fulfillment of the conditions prescribed therein. Where these conditions are not satisfied, Hon’ble Courts may be suitably informed and if needed review or appeal may be filed.10. Trade may be suitably informed and difficulty if any in implementation of the circular may be brought to the notice of the Board.

(ROHAN)

(Deputy Commissioner)”

46. At the very beginning of the said Circular, it has been recognized by the highest administrative authority under the CGST Act (the CBIC) – the need to address the difficulties faced by the taxpayers owing to technical glitches. It needs no further emphasis, under the changed indirect tax regime, introduced by the CGST Act and the UPGST enactments, the “registered persons” were left with no choice but to submit/revise the Form GST TRAN-1/TRAN-2 electronically, over the GST Portal. In its wisdom, the Parliament, and its delegate the Central Government and State Government did not offer by way of an alternative method, permission to transition the CENVAT/VAT ITC arising under the pre-existing/repealed laws, by physical filing of Form GST TRAN-1/TRAN-2. The legislature and its delegate chose to insist that the transition provision be given effect to only through submission/revision of the form GST TRAN-1/TRAN-2 electronically. That insistence was a policy decision, perhaps, to put the entire indirect tax regime of the country on one, inter-operable platform, in a single step.

47. Though, no debate may be entertained by this Court as to the wisdom of the Parliament and its delegate and the merits of that method prescribed under the new indirect tax regime and though time allowance may be claimed by the respondents, to sort out the initial difficulties and issues and no challenge may arise to the new regime on that count, at the same time, the Courts cannot remain oblivious or indifferent, either to the plight of the “registered persons”/taxpayers who provide the fuel to run that gigantic machinery of the State or to the purpose and object of the whole exercise.

48. As we have examined above, it was never the object of the Parliament to defeat the CENVAT or ITC arising under the pre-existing/repealed indirect tax laws. In fact, the CGST Act and the UPGST Act sought to protect and make available to the “registered persons”, the benefit of CENVAT and ITC earned under the pre-existing laws. Mainly, the Parliament enacted two pre-conditions to avail that CENVAT and ITC by insisting, only such CENVAT and ITC be allowed to be recorded in the Electronic Credit Ledger of the “registered persons”, with respect to which a return may have been filed by that person under the pre-existing laws, for period ending 30.06.2017 or by production of Tax Invoice of input or stocks etc. The second stipulation is, such figures must be translated and submitted electronically on the GST Portal through the Form GST TRAN-1/TRAN-2, within the prescribed time. As to the prescribed manner, there is no quarrel between the parties. The petitioners do not contend, that the details required to be filled up in the Form were impossible or difficult to be filled up. The only challenge they raise is based on their inability to submit electronically that data on the GST Portal, within time granted.

49. Undisputedly, the GST Portal was set up and was run and managed by Government corporation known as the GST Network. There was no alternative method available to submit electronically the Form GST TRAN-1/TRAN-2. Therefore, unless the said GST Portal was up and running without any errors, the time limit that had been set by the Act and the Rules and the orders and notifications issued thereunder, would remain directory or elastic, within reasonable limits. That time limit was set at the date 31.08.2020.

50. Though the consequence of non-submission of those Forms are also clearly visible, yet no procedural law may be valid or held mandatory, if there exists physical impossibility or unreasonable difficulty/obstruction, to comply with the same. Once the CGST Act prescribed the manner and time to submit/revise only electronically through Form GST TRAN-1/ TRAN-2, the State was obligated to provide a robust and wholly reliable GST Portal to comply with that law. Failure or inability to provide that reliable online platform would render the strict time prescription (made under Section 140 of the CGST Act read with Rule 117 of the CGST Rules), arbitrary and therefore violative of Article 14 of the Constitution of India.

51. Coming back to the Circular dated 3 April 2018, the CBIC further recognized, there were IT related glitches on the GST Portal resulting in compliances remaining from being made by a vast section of “registered persons”. Once that difficulty was recognized to have existed on a pan-India basis, over a long duration of time, the CBIC, in its own wisdom, created a mechanism to resolve the same. Chiefly, it provided for creation of Nodal agencies to examine all such grievances of IT related glitches and to allow for extension of time (to submit GST Form TRAN-1/TRAN-2, electronically), only in those cases where a complaint had been received by the Nodal authority and where electronic trail etc. of such failed attempt was available.

52. Thus, the CBIC itself recognized the existence of technical difficulties in working the GST Portal over a long period of time, that too, immediately upon introduction of the GST regime. A long and burdensome transition was attempted all over the country, by all indirect taxpayers. It compounded that difficulty further. The Court cannot remain unmindful of the fact that numerous writ petitions came to be filed all over the country, before different High Courts wherein some Courts granted interim relief while in other cases, final orders came to be passed allowing the complaining “registered persons”/taxpayers, time to submit/revise the Form GST TRAN-1/TRAN-2, electronically. Thus, the Delhi High Court in the case of Blue Bird Pure Pvt. Ltd. (supra) relied on its earlier decision Bhargava Motors Vs Union of India, dated 13 May, 2019 in WP (C) No. 1280/2018 and observed as under:

“10. Having carefully examined those decisions, the Court is unable to find any distinguishing feature that should deny the Petitioner a relief similar to the one granted in those cases. In those cases also, there was some error committed by the Petitioners which they were unable to rectify in the TRAN-1 Form and as a result of which, they could not file the returns in TRAN-2 Form and avail of the credit which they were entitled to. In both the said decisions, the Court noticed that GST system is still in the ‘trial and error phase’ insofar as its implementation is concerned. It was observed in Bhargava Motors (supra) as under:

“10. The GST System is still in a ‘trial and error phase’ as far as its implementation is concerned. Ever since the date the GSTN became operational, this Court has been approached by dealers facing genuine difficulties in filing returns, claiming input tax credit through the GST Portal. The Court’s attention has been drawn to a decision of the Madurai Bench of the Madras High Court dated 10th September, 2018 in W.P. (MD) No. 18532/2018 (Tara Exports v. Union of India) where after acknowledging the procedural difficulties in claiming input tax credit in the TRAN-1 form that Court directed the respondents “either to open the portal, so as to enable the petitioner to file the TRAN1 electronically for claiming the transition credit or accept the manually filed TRAN1” and to allow the input credit claimed “after processing the same, if it is otherwise eligible in law”.

11. In the present case also the Court is satisfied that the Petitioner’s difficulty in filling up a correct credit amount in the TRAN-1 form is a genuine one which should not preclude him from having its claim examined by the authorities in accordance with law. A direction is accordingly issued to the Respondents to either open the portal so as to enable the Petitioner to again file TRAN-1 electronically or to accept a manually filed TRAN-1 on or before 31st May, 2019. The Petitioner’s claims will thereafter be processed in accordance with law.

12. With a view to ensure that in future such glitches can be overcome, the Court directs the Respondents to consider providing in the software itself a facility of the trader/dealer being able to save onto his/her system the filled up form and also a facility for reviewing the form that has been filled up before its submission. It should also permit the dealer to print out the filled up form which will contain the date/time of its submission online. The Respondents will also consider whether there can be a message that pops up by way of an acknowledgement that the Form with the credit claimed has been correctly uploaded.”

53. That view was followed by the Delhi High Court in R.R. Distributors Pvt. Ltd. (supra), wherein it was held as below:

“10. As can be seen from the aforesaid decisions, this Court has held that inadvertent and genuine mistakes in filling up the correct details of credit in TRAN-1 Form should not preclude taxpayers from having claims examined by the authorities in accordance with law. This Court has consistently been issuing directions to the Respondents and granting relief to such taxpayers. When the Petitioner attempted to upload TRAN-2 Form, it was prevented to do so because of the error committed by him while making the declaration in the TRAN-1 Form, however, the system did not enable the Petitioner to revise TRAN-1 Form on the system. In Blue Bird Pure (supra), this Court, had, in fact, observed that the Respondents ought to have provided a facility in the system itself for rectification of errors which are clearly bona fide. Further, the Court had also noticed that although the system provided for revision of a return, the deadline for making the revision coincided with the last date for filing the return i.e., 27th December, 2017, rendering such facility to be impractical and meaningless.

11. Further, this Court, in the case of Aadinath Industries & Ors. v. Union of India and Ors.5, Lease Plan India Private Limited v. Government of National Capital Territory of Delhi and Ors.6, Godrej & Boyce Mfg. Co. Ltd. v. Union of India and Ors.7, Arora & Co v. Union of India & Ors., 8 and M/s Blue Bird (supra), has taken a similar view. In our view, the non- filing of part 7B of table 7(a) and table 7(d) of TRAN-1 Form cannot impair the rights of the petitioner to claim transition ITC, if he is otherwise eligible. This Court has observed in numerous decisions that the GST system was in a trial-and-error phase as far as its implementation was concerned and ever since GSTN network became operational, taxpayers genuinely faced difficulties in filing the returns and input tax credit in the GST Portal. Acknowledging the procedure and difficulties in claiming input tax credit, this Court and several other High Courts have granted relief to such taxpayers. Failure on the part of the Petitioner to give relevant details in TRAN-1 Form can only be taken as a procedural lapse which should not cause any impediment to its right to claim transition ITC.”

54. In Carlsthal Craftsman Enterprises (supra), the Madras High Court was persuaded to follow the above view of the Delhi High Court. It allowed the “registered persons”/taxpayers to transition the ITC. It was held:

“4. In the present case, the error is seen to be inadvertent, constituting a human error. The Revenue does not dispute this either. Moreover, the era of GST is nascent and I am of the view that a rigid view should not be taken in procedural matters such as the present one.

5. The petitioner is thus be permitted to transition the credit. After all, the consequence of such transition is only the availment of the credit and not the utilization itself, which is a matter of assessment and which can be looked into by the Assessing Officer at the appropriate stage.”

55. In Jakap Metind (supra), the Gujarat High Court allowed revision of Form GST TRAN-1 electronically, outside the strict time limit prescribed under the Act and the Rules read with the orders and notifications operating at the relevant time. It was held as below:

“18. In the case of Bhargava Motors v. Union of India rendered on 13th May, 2019 in WP(C) 1280/2018, the Delhi High Court held as under:

10. The GST System is still in a ‘trial and error phase’ as far as its implementation is concerned. Ever since the date the GSTN became operational, this Court has been approached by dealers facing genuine difficulties in filing returns, claiming input tax credit through the GST portal. The Court’s attention has been drawn to a decision of the Madurai Bench of the Madras High Court dated 10th September, 2018 in W.P. (MD) No. 18532/2018 (Tara Exports vs. Union of India) where after acknowledging the procedural difficulties in claiming input tax credit in the TRAN-1 form that Court directed the respondents “either to open the portal, so as to enable the petitioner to file the TRAN1 electronically for claiming the transition credit or accept the manually filed TRAN1” and to allow the input credit claimed “after processing the same, if it is otherwise eligible in law.

11. In the present case also the Court is satisfied that the Petitioner’s difficulty in filling up a correct credit amount in the TRAN-1 form is a genuine one which should not preclude him from having its claim examined by the authorities in accordance with law. A direction is accordingly issued to the Respondents to either open the portal so as to enable the Petitioner to again file TRAN-1 electronically or to accept a manually filed TRAN-1 on or before 31st May, 2019. The Petitioner’s claims will thereafter be processed in accordance with law.

12. With a view to ensure that in future such glitches can be overcome, the Court directs the Respondents to consider providing in the software itself a facility of the trader/dealer being able to save onto his/her system the filled up form and also a facility for reviewing the form that has been filled up before its submission. It should also permit the dealer to print out the filled up form which will contain the date/time of its submission online. The Respondents will also consider whether there can be a message that pops up by way of an acknowledgement that the Form with the credit claimed has been correctly uploaded.

also consider whether there can be a message that pops up by way of an acknowledgement that the Form with the credit claimed has been correctly uploaded.

23. In this case, it is not as if the petitioner has not filed FORM GST TRAN-1 within the time provided by the respondents under the rules. The petitioner had filed the form, but on account of not properly understanding the nature of the columns provided in the form, due to inadvertent error, did not mention the details of Rs.83,99,136/- in column 6 of Table 5a and instead uploaded the details in column 5 of Table 5a in FORM GST TRAN-1. Now the substantive right of the petitioner to claim transition credit of such amount is sought to be denied on the ground that the time limit for filing revised FORM GST TRAN-1 has elapsed.

24. In the opinion of this court, as held by the Delhi High Court in M/s Blue Bird Pure Pvt. Ltd. vs. Union of India (supra), the respondents ought to have provided in the system itself a facility for rectification of such errors which are clearly bona fide. Besides, although the system provided for revision of a return, the deadline for making the revision coincided with the last date for filing the return, that is, 27th December, 2017. Thus, such facility was rendered impractical and meaningless.

25. This court is further of the view that retention of the amount of Rs.83,99,136/- by the respondents which the petitioner is otherwise entitled to get by way of transition credit would be directly hit by article 265 of the Constitution of India which provides that no tax shall be levied or collected except by authority of law. The respondents have no legal authority to retain the amount of credit to which the petitioner is duly entitled and retention of the same is violative of article 265 of the Constitution of India. Therefore, when the petitioner is entitled to credit of Rs.83,99,136/-, non grant of the same is bad in law.”

56. In Adfert Technologies Private Ltd. Vs Union of India (supra) the Punjab & Haryana High Court also took a similar view. It was held as below:

“Having scrutinized record of the case(s) and heard arguments of both sides, we find that on the introduction of GST regime, Government granted opportunity to registered persons to carry forward unutilized credit of duties/taxes paid under different erstwhile taxing statues. GST is an electronic based tax regime and most of people of India are not well conversant with electronic mechanism. Most of us are not able to load simple forms electronically whereas there were a number of steps and columns in TRAN-1 forms thus possibility of mistake cannot be ruled out. Various reasons assigned by Petitioners seem to be plausible and we find ourselves in consonance with the argument of Petitioners that unutilized credit arising on account of duty/tax paid under erstwhile Acts is vested right which cannot be taken away on procedural or technical grounds. The Petitioners who were registered under Central Excise Act or VAT Act must be filing their returns and it is one of the requirements of Section 140 of CGST Act, 2017 to carry forward unutilized credit. The Respondent authorities were having complete record of already registered persons and at present they are free to verify fact and figures of any Petitioner thus inspite of being aware of complete facts and figures, the Respondent cannot deprive Petitioners from their valuable right of credit.”

57. Earlier, a coordinate Bench of this Court in Writ Tax No. 1120 of 2019 (M/S Ingersoll-Rand Technologies & Services Pvt. Ltd. Vs. Union of India & 3 Ors.) also had the occasion to consider this issue whereupon it required the GST Council to take a decision in the matter. The matter was required to be examined by the GST Council. However, no contrary view (of this Court), has been shown to us.

58. Undisputedly, existence of various opinions of different High Courts referred above are also clear evidence of the difficulty faced by the “registered persons”/taxpayers, pan-India. Also, those decisions are evidence of that difficulty faced over a long duration of time, stretching into the period when the pandemic COVID-19 spread all over the country, beginning from 2019 (Blue Bird Pure Pvt. Ltd. case) to 2021 (R R Distributor case).

59. Looking at the institution date of the present batch of writ petitions, we find, these have been instituted from the year 2018 to 2021. It corresponds to the period when similar petitions were filed and were decided in favour of other “registered persons”/taxpayers, by other High Courts, allowing them margin of time to submit/revise electronically, Form GST TRAN-1 and/or TRAN-2.

60. Therefore, without referring to the individual difficulties cited by the petitioners in the present batch of petitions, we are of the opinion, the difficulties claimed were generic as had been recognized by the CBIC itself vide his circular dated 03.04.2018 as also by various decisions of the other High Courts. Those difficulties and obstacles were suffered over a very long duration. It therefore necessarily emerges that the petitioners/“registered persons” were unreasonably obstructed on account of technical glitches and errors on the GST Portal during the limited time they were required to submit/revise electronically, Form GST TRAN-1/TRAN-2 electronically.

61. They were obstructed, and remained disabled (generally) owing, not to any conduct attributable to them but owing solely to factors beyond their control and for reasons attributable to the respondents. Consequently, it would be arbitrary, to enforce strict timeline prescribed under the Act and the Rules framed thereunder, against them.

62. Rule of law and good administration go hand in hand. It is true, no ITC may arise under the GST regime unless a “registered person” fulfils the conditions therefor, so also, the administration of tax law that is in the hands of the GST Council, GST Commissioner (Central), GST Commissioner (UP), GST Network and all other State or statutory authorities, must allow all “registered persons”/taxpayers, reasonable opportunity to exercise their rights and make their claims, in the manner contemplated by law.

63. Though unintentional on part of the State authorities, it cannot be lost sight that the obstruction thus caused was attributable only to the conduct of the State authorities since, the GST Portal is a creation of the State authorities and the responsibility to run the same seamlessly, rests exclusively on them. The “registered persons”/taxpayers, whose rights were adversely impacted by the lack of smooth operation of the GST Portal, could not be saddled with any civil consequences arising from the non-functioning or improper or irregular functioning of the GST Portal.

64. Once the CBIC clearly recognised the existence of such technical glitches on the GST Portal, we fail to understand why and on what reasonable basis the CBIC and the revenue authorities insisted for specific evidence and verification as a condition to grant relaxation of timeline – to submit/revise/re-revise Form GST TRAN-1/TRAN-2. The “registered persons”/taxpayers have been saddled with the burden to produce evidence of individual difficulty faced. In absence of existence of any statutory requirement (at the relevant time), that burden would now involve recalling from memory, the number of attempts made and the time and date when such attempt was made – to retrieve electronic trail of that event.

65. In absence of any enabling law, that burden cast on the “registered persons”/tax payers – to lead evidence of difficulty faced, is wholly arbitrary and unreasonable and therefore unenforceable. The injury caused being attributable to the State authorities, even if unintentional, the “registered persons”/taxpayers cannot be burdened today, to bring home evidence to establish the extent of the injury caused that too with respect to transition provision newly introduced, especially when the injury sprung from a generic event/cause.

66. It is also a common fact, not all “registered persons”/taxpayers would submit electronically, Form GST TRAN-1/TRAN-2, themselves. Often, professionals are hired to make such compliances. A single tax practitioner or Chartered Accountant may be engaged by numerous “registered persons”/taxpayers to submit electronically, their respective Form GST TRAN-1/TRAN-2. Once such professional would try to submit such Form electronically, on behalf of one taxpayer and fail, as part of the prudent behaviour, he may be expected to make no further attempts on behalf of each of the other “registered person”/taxpayer, at the same time, though he may have been similarly engaged by others as well.

67. At the relevant time, there was no requirement in law and even today, there is no requirement either under the Act or the Rules, to obtain evidence of every attempt made to submit Form GST TRAN-1 or TRAN-2. It is only by way of the Circular instruction dated 3.4.2018 that such a requirement was introduced by the revenue authorities. It is arbitrary and therefore unenforceable.

68. Commonly, the CBIC Circulars are issued to give effect to law and make it functional and practical. Insofar as the procedures are concerned, often CBIC Circulars introduce measures to reduce the rigour of law. In the present facts, we find, the CBIC has travelled half the distance required and left the taxpayers in the lurch for the other half. Having recognised the continued generic errors on the GST Portal, it would have been wholly reasonable and within the powers exercised by the CBIC, to remove all legal impediments. Perhaps, it has escaped the attention of the CBIC that it was never the requirement of law that such evidence of failed attempts to submit Form GST TRAN-1/TRAN-2 be maintained, in any form. To enforce that condition is plainly not protected by any Statute or Rule.

69. If allowed to work, it would create hostile discrimination between two similarly situated persons based solely on the chance occurrence of one having in his possession proof of attempt/s made to submit/revise/re-revise Form TRAN-1/TRAN-2, electronically, though he was not required (by law), to obtain or maintain such evidence. Any law that may differentiate between two similarly situated persons based on a chance occurrence/s and allow the valuable civil rights of a citizen to be prejudiced, based solely on that, would remain exposed to the vice of arbitrariness and therefore be invalid. In State of Andhra Pradesh & Anr. Vs. Nalla Raja Reddy & ors., AIR 1967 SC 1458, a Constitution Bench of the Supreme Court observed as under:-

“Official arbitrariness is more subversive of doctrine of equality than the statutory discrimination. In spite of statutory discrimination, one knows where he stands but the wand of official arbitrariness can be waved in all directions indiscriminately.”

70. Similarly, in G. Jaisinghani Vs. Union of India & ors., AIR 1967 SC 1427, a Constitution Bench of the Supreme Court observed as under:-

“In the context it is important to emphasize that absence of arbitrary power is the first essence of the rule of law, upon which our whole Constitutional System is based. In a system governed by rule of law, discretion, when conferred upon Executive Authorities, must be confined within the clearly defined limits. Rule of law, from this point of view, means that the decision should be made by the application of known principle and rules and in general such decision should be predictable and the citizen should know where he is, if a decision is taken without any principle or without any rule, it is unpredictable and such a decision is antithesis to the decision taken in accordance with the rule of law.”

71. Looked from another perspective, the clear intent of the legislature is to grant benefit of CENVAT and ITC under the pre-existing laws, as may have been carried forward on the appointed date 01.07.2017. In such circumstances, if the GST Portal had worked seamlessly, all petitioners would have submitted/revised/re-revised electronically, their Forms GST TRAN-1 and/or TRAN-2 within the time granted. In that situation, all petitioners would clearly be entitled to avail ITC under the CGST Act and the UPGST Act, without any objection by the State/revenue authorities. Taxing statute and equity considerations are not natural allies. At the same time, in the context of a purely procedural requirement and transition provision, we cannot act unmindful of that consequence – if the respondents had offered a functional system, the State could not have deprived the petitioners of transition credit of CENVAT and ITC (under the repealed laws).

72. Thus, we have no hesitation in observing that a reasonable opportunity ought to have been granted to all “registered persons”/taxpayers to submit/revise/re-revise electronically their Form GST TRAN-1/TRAN-2.

73. For the reasons given above, we allow all the writ petitions with the following directions:

(i) All petitioners before this Court may first file physical Form GST TRAN-1/TRAN-2 before their respective jurisdictional authority, within a period of four weeks from today.

(ii) That jurisdictional authority shall then make a report in writing on the same, as to compliances contemplated under Section 140 of the CGST Act and Rule 117 of the CGST Rules.

(iii) In case, no objection be taken, a report to submit/revise/re-revise the Form GST TRAN-1/TRAN-2 electronically, would be made by the concerned jurisdictional authority, within a period of two weeks.

(iv) In the event of any objection arising, one limited opportunity may be given to that petitioner to correct or revise or re-revise the physical Form GST TRAN-1/TRAN-2. That exercise may be completed within a period of three weeks and the report be submitted accordingly.

(v) Upon completion of that exercise, the jurisdictional authority shall forward his report along with said physical GST TRAN-1/TRAN-2 to the GST Network, within a further period of one week, with a copy of that communication to the petitioner concerned, through Email or other approved mode. No form submitted in compliance of this order would be rejected/declined as filed outside time.

(vi) The GST Network shall thereupon either itself upload the GST TRAN-1/TRAN-2, within two weeks of receipt of such communication or allow that petitioner opportunity to upload those details, within a reasonable time.

74. We make it clear, the above exercise would be a one-time affair and any details thus submitted would not remain open to any further or other revision by the petitioners/“registered persons”.

75. Since, we have noted the general difficulty obtaining with all the “registered persons”/taxpayers and have considered the same to be generic in nature, we also make this order applicable to all other “registered persons”/taxpayers within the State of U.P. (who are not before this Court), subject to the modification that such non-petitioners/“registered persons” may approach their jurisdictional authority, as above, within a period of eight weeks from today. The further timelines provided by this Court shall stand modified accordingly.

76. We also provide, subject to right of appeal that otherwise exists with the respondents (against this order), they shall host the operative portion of this order on their website and the GST portal to ensure that the one-time/final resolution is made of all disputes of this nature, in the State of U.P. It will also avoid repeated and continued litigation for years after the GST regime has come into existence.

77. All writ petitions are thus allowed. No order as to costs.

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