HC held that The plea of technical difficulties or technical glitches will not come in the way of the above order being given effect to. For this purpose a direction is issued to GSTN to either modify or make changes in the portal to facilitate the Petitioner filing TRAN-1 to claim the ITC or accept returns manually against the old RC so that the Petitioner can avail of the ITC.
FULL TEXT OF THE JUDGMENT/ORDER OF ORISSA HIGH COURT
1. The present petition seeks a direction to the Opposite Parties to implement the order dated 17th September, 2018 passed by the Joint Commissioner of Sales Tax, Bolangir Range, Bolangir (hereinafter referred to as ‘Revisional Authority’) directing restoration of old registration number under the GST Act. The Petitioner has also sought the quashing of the demand dated 4th March, 2021 as a result of denial of the Input Tax Credit (ITC) to the Petitioner. The third prayer is for a direction to the Opposite Parties to permit the Petitioner to avail the ITC as an existing dealer under the existing law or on the goods held in stock on the appointed day.
2. When the petition was listed on 13th April, 2021, Mr. Sidhartha Ray, learned counsel for the Petitioner, on instructions stated that the Petitioner is confining his prayer to restoration of his “original registration in terms of the order passed in his favour in that regard on 17th September, 2018 by the Joint Commissioner of Sales Tax, Bolangir Range, Bolangir.” Mr.Ray stated that the Petitioner would seek other appropriate remedies as regards the other prayers.
3. On 6th July, 2021, when the petition was listed again for hearing, the following order was passed:
“ 1. This matter is taken up through video conferencing mode.
2. Mr. Padhy prays and is granted two weeks’ time to file an affidavit explaining the issues involved in restoration of the Petitioner’s original registration. The affidavit will also deal with the submission made today by Mr. Ray on behalf of the Petitioner that the Petitioner is willing to give up the new registration so that the earlier registration could be revived.
3. List on 24th August, 2021.”
4. In para 5 of the counter affidavit filed by the Opposite Parties on 21st August, 2021 it is stated that since a new registration has been granted to the Petitioner against his application on 6th May, 2017, the restoration order dated 17th September, 2018 against the application dated 18th June, 2018 “could not be supported by the system i.e. VATIS Portal.” The running theme of the counter affidavit is that even though the Petitioner may be willing to surrender the new registration, the old registration cannot be restored to him since he voluntarily applied for a new registration.
5. Mr. Ray has placed reliance on a judgment of High Court of Delhi in SKH Sheet Metals Components v. Union of India (2020) 79 GSTR 7 (Del) to urge that the relief already granted to the Petitioner in terms of the order dated 17th September, 2018 of the Revisional Authority cannot be denied on the ground of ‘technical difficulty’.
6. Mr. Sunil Mishra, learned Standing Counsel for the Department sought to submit that even if the old registration is restored, the stage for filing of TRAN-1 forms have already been crossed and therefore, it would be of no assistance to the Petitioner to have its old registration number restored. According to Mr. Mishra, since a new registration number has already been granted to the Petitioner on his application, he should not insist upon restoration of the old registration number. He drew attention to the undertaking given by the Petitioner on 5th April, 2017 when the new registration was issued to him. He had undertaken to file returns as per law and not repeat the same mistake for which his earlier registration was cancelled.
7. The further stand of the Department is that for the period 1st April, 2013 to 31st December, 2016 the Petitioner filed returns with nil transaction and nil turnover” and has not disclosed any unadjusted ITC. Mr. Mishra submitted that the ITC claimed may not pertain to the GST period at all. However, Mr. Ray drew attention to the Petitioenr’s reply to the show cause notice regarding mismatch of the ITC for the period 1st August to 31st August, 2017. The Petitioner explained in para 5 of the reply as under:
“5. That the Noticee/Dealer claimed Input Tax Credit to the tune of Rs.59,60,712.00 which is carried forward from previous periods as unutilised ITC and accordingly the Noticee filed its returns under the GST Act. This show cause Notice has been issued for mismatch of Input Tax Credit relating to the carried forward ITC of Rs.59,26,409.00.”
8. The above submissions have been considered. The case of the Department is that the cancellation of the Petitioner’s registration certificate issued originally under the Orissa Value Added Tax Act came about since the Petitioner failed to file returns. The case of the Petitioner, however, was that because of the cancellation of the registration certificate under the OVAT Act, he was not able to file returns and therefore was compelled to obtain a new registration.
9. Be that as it may, the fact remains that the Petitioner did seek the legal remedies against the cancellation of his old registration number. His revision petition came to be allowed on 17th September, 2018 by Opposite Party No.2. By that order, the old registration certificate was under OVAT Act restored and the further consequential restoration of the RC under the OST and CST Act, if any, also issued. The fact further remains that the above order of the revisional authority was not implemented by the Opposite Parties. This is what has ultimately led to the Petitioner approaching this Court for relief as noted above. The counter affidavit of the Department states that the order of the revisional authority although not challenged by the department, was also not implemented by it and this is only because a new RC had already been issued.
10. The above stand of the Department fails to address the main grievance of the Petitioner about non-implementation of the order dated 17th September, 2018 passed by the revisional authority. There is no valid reason given why the said registration was cancelled in first place without notice to the Petitioner. This failure to issue notice prior to cancellation was what led the revisional authority to order restoration of the old/original registration.
11. With the Petitioner being constrained to apply for a new RC, in order to continue to transact business, it cannot be held against him that his application for the new RC should be construed as his having given up his claim for restoration of his old RC. On the contrary, he has an order in his favour by the revisional authority for restoration of his old RC. Even the filing of the present petition indicates the clear intention of the Petitioner that he wants the old RC to be restored.
12. The Court finds at the observations of the Delhi High Court in SKH Sheet Metals Components support the contention of the Petitioner. There the Court was considering the effect of introduction of Sub rule (1A) in Rule 117 of the CGST Rules and the difficulties faced by the Petitioner therein in availing the ITC. The Delhi High Court observed as under:
“19. The introduction of Sub rule (1A) in Rule 117 is a patchwork solution that does not recognize the entirety of the situation. It sneaks in an exception, without addressing situations taken note of by us. This exception, as worded, is an artificial construction of technical difficulties, limiting it to those existing on the common portal. It is unfair to create this distinction and restrict it to technical snages alone. In our view, there could be various different types of technical difficulties occurring on the common portal which may not be solely on account of the failure to upload the form. The access to the GST portal could be hindered for myriad reasons, sometimes not resulting in the creation of a GST log-in record. Further, the difficulties may also be offline, as a result of several other restrictive factors. It would be an erroneous approach to attach undue importance to the concept of “technical glitch” only to that which occurs on the GST Common portal, as a precondition, for an assessee/tax payer to be granted the benefit of Sub-rule (1A) of Rule 117. The purpose for which Sub-Rule(1A) to Rule 117 has been introduced has to be understood in the right perspective by focusing on the purpose which it is intended to serve. The purpose was to save and protect the rights of taxpayers to avail of the CENVAT credit lying in their account. That objective should also serve other taxpayers, such as the petitioners. The approach of the Government should be fair and reasonable. It cannot be arbitrary or discriminatory, if it has to pass the muster of Article 14 of the Constitution. The Government cannot turn a blind eye, as if there were no errors on the GSTN portal. It cannot adopt different yardsticks while evaluating the conduct of the taxpayers, and its own conduct, acts and omissions. The extremely narrow interpretation that the respondents seek to advance, of the concept of
“technical difficulties”, in order to avail the benefit of Sub Rule (1A), is contrary to the statutory mechanism built in the transitory provisions of the CGST Act.”
13. In the present case, the Court finds the stand taken by the Opposite Parties in insisting on the Petitioner continuing new registration to be unreasonable particularly since admittedly the Department has not yet implemented the order dated 17th September, 2018 of the revisional authority while at the same time not challenging it.
14. In any event given the limited nature of the prayer made in the present case as noted by this Court in the order dated 13th April, 2021, the Court has no difficulty in accepting that prayer of the Petitioner and directing as under:
(i) In implementation of the order dated 17th September, 2018 passed by Opposite Party No.2 in Revision Case No. 193/2018-19, the Opposite Parties will restore the Petitioner’s old RC number and cancel the new RC number issued to him.
(ii) The plea of technical difficulties or technical glitches will not come in the way of the above order being given effect to. For this purpose a direction is issued to GSTN to either modify or make changes in the portal to facilitate the Petitioner filing TRAN-1 to claim the ITC or accept returns manually against the old RC so that the Petitioner can avail of the ITC.
(ii) The directions issued in (i) and (ii) above be implemented within eight weeks from today.
15. As regards the other reliefs prayed for, as already noticed in the order dated 13th April, 2021, it would be open to the Petitioner to avail other appropriate remedies in accordance with law.
16. The petition is disposed of in the above terms.
17. Urgent certified copy of this order be issued as per Rules.