Case Law Details
Emerson Process Management Power & Water Solutions India Pvt. Ltd Vs Union of India (Delhi High Court)
In the present case, the petitioner’s request for refund of CENVAT credit in cash was rejected for the reason that it was filed beyond the period of limitation. The petitioner submits that although it was no longer entitled to receive cash equivalent to the CENVAT credit in its account, it was nonetheless entitled to utilize the same for the specified purpose. He submits that in the circumstances, the proviso to Section 142(3) of the Act must be read in a restrictive manner, to only apply in cases where the claim for cash refund of CENVAT credit has been rejected on merits and not on the ground of limitation. He submits that it is well settled that limitation would bar a particular remedy but does not extinguish a right.
After some arguments, the learned counsel for the parties point out that the Supreme Court in the case of Union of India & Anr. v. Filco Trade Centre Pvt. Ltd. & Anr. [SLP(C) Nos.32709-32710/2018] has passed a blanket order directing the respondent to open the portal for filing of relevant forms, that is, TRAN-1 and TRAN-2 for two months.
The period of two months was subsequently extended by another order dated 02.09.2022 and the window for filing the necessary forms is now open till 30.11.2022.
A plain reading of the aforesaid directions also indicates that the concerned officer has been given 90 days to verify the veracity of the claims / transitional credit and to pass appropriate orders on merits after granting the reasonable opportunity to the parties concerned.
Since the impugned order dated 26.04.2019 rejects the petitioners request for filing Form GST TRAN-1 solely for the reason that it was delayed, the said issue stands covered by the aforesaid decision of the Supreme Court.
In the given context, this Court does not consider it necessary to examine the question whether the petitioner’s claim for transit of CENVAT credit has been lapsed on account of rejection of its claim for cash refund as being delayed.
In the event the concerned officer finds that the petitioner’s claim would not be tenable, he is required to pass an appropriate order after hearing the petitioner as directed by the Supreme Court.
In view of the decision aforesaid of the Supreme Court, the petitioner is entitled to file Form GST TRAN-1.
FULL TEXT OF THE JUDGMENT/ORDER OF DELHI HIGH COURT
1. The petitioner has filed the present petition, inter alia, impugning an order dated 26.04.2019 passed by respondent no.5 whereby the petitioner’s request for submitting the revised Form GST TRAN-1 for availing the service tax credit amounting to ₹14,75,560/- was rejected.
2. The petitioner is engaged in the business of exporting services. It is the petitioner’s case that it had exported certain software development services which were exempt from service tax, however, the petitioner had paid – albeit indirectly – service tax under input service for providing export services. The petitioner claims that it had filed a refund claim for the accumulated tax credit of ₹14,75,560/-.
3. The petitioner has filed the present petition, as his request for transit of the said input tax credit into the GST regime by filing TRAN-1 was rejected by the impugned communication.
4. A plain reading of the impugned communication indicates that petitioner’s request was rejected for the reason that it had not filed the GST TRAN-1 within the stipulated period. The communication also mentions that the petitioner’s request for cash refund of the input tax credit was rejected by Customs Excise and Service Tax Appellate Tribunal (CESTAT) by its final order dated 07.05.2017.
5. The learned counsels appearing for the respondents, submits that the petitioner is not entitled for carrying forward its input tax credit in the GST regime for the reason that its claim for cash refund has been rejected. He submits that Section 142(3) of the Central Goods and Services Tax Act, 2017 expressly provides that where a claim for refund of CENVAT credit has been rejected, the amount so rejected would lapse. Section 142(3) of the said Act reads as under:
“142(3) Every claim for refund filed by any person before, on or after the appointed day, for refund of any amount of CENVAT credit, duty, tax, interest or any other amount paid under the existing law, shall be disposed of in accordance with the provisions of existing law and any amount eventually accruing to him shall be paid in cash, notwithstanding anything to the contrary contained under the provisions of existing law other than the provisions of sub-section (2) of section 11B of the Central Excise Act, 1944:
Provided that where any claim for refund of CENVAT credit is fully or partially rejected, the amount so rejected shall lapse:
Provided further that no refund shall be allowed of any amount of CENVAT credit where the balance of the said amount as on the appointed day has been carried forward under this Act.”
6. In the present case, the petitioner’s request for refund of CENVAT credit in cash was rejected for the reason that it was filed beyond the period of limitation. The petitioner submits that although it was no longer entitled to receive cash equivalent to the CENVAT credit in its account, it was nonetheless entitled to utilize the same for the specified purpose. He submits that in the circumstances, the proviso to Section 142(3) of the Act must be read in a restrictive manner, to only apply in cases where the claim for cash refund of CENVAT credit has been rejected on merits and not on the ground of limitation. He submits that it is well settled that limitation would bar a particular remedy but does not extinguish a right.
7. After some arguments, the learned counsel for the parties point out that the Supreme Court in the case of Supreme Court in the case of Union of India & Anr. v. Filco Trade Centre Pvt. Ltd. & Anr. [SLP(C) Nos.32709-32710/2018] has passed a blanket order directing the respondent to open the portal for filing of relevant forms, that is, TRAN-1 and TRAN-2 for two months. The relevant extract of the said order is as under:
“1. Goods and Service Tax Network (GSTN) is directed to open common portal for filing concerned forms for availing Transitional Credit through TRAN-1 and TRAN-2 for two months i.e. w.e.f. 01.09.2022 to 31.10.2022.
2. Considering the judgments of the High Courts on the then prevailing peculiar circumstances, any aggrieved registered assessee is directed to file the relevant form or revise the already filed form irrespective of whether the taxpayer has filed writ petition before the High Court or whether the case of the taxpayer has been decided by Information Technology Grievance Redressal Committee (ITGRC)
3. GSTN has to ensure that there are no technical glitch during the said time.
4. The concerned officers are given 90 days thereafter to verify the veracity of the claim / transitional credit and pass appropriate orders thereon on merits after granting appropriate reasonable opportunity to the parties concerned.
5. Thereafter, the allowed Transitional Credit is to be reflected in the Electronic Credit Ledger.
6. If required GST Council may also issue appropriate guidelines to the field formations in scrutinizing the claims.”
8. The period of two months was subsequently extended by another order dated 02.09.2022 and the window for filing the necessary forms is now open till 30.11.2022.
9. A plain reading of the aforesaid directions also indicates that the concerned officer has been given 90 days to verify the veracity of the claims / transitional credit and to pass appropriate orders on merits after granting the reasonable opportunity to the parties concerned.
10. Since the impugned order dated 26.04.2019 rejects the petitioners request for filing Form GST TRAN-1 solely for the reason that it was delayed, the said issue stands covered by the aforesaid decision of the Supreme Court.
11. In the given context, this Court does not consider it necessary to examine the question whether the petitioner’s claim for transit of CENVAT credit has been lapsed on account of rejection of its claim for cash refund as being delayed.
12. In the event the concerned officer finds that the petitioner’s claim would not be tenable, he is required to pass an appropriate order after hearing the petitioner as directed by the Supreme Court.
13. In view of the decision aforesaid of the Supreme Court, the petitioner is entitled to file Form GST TRAN-1.
14. No further orders are required to be filed in the present petition by this Court. The petition is disposed of. All rights and contentions of the parties are reserved.
Dasti under signature of the Court Master.
