Case Law Details
Principal Chief Commissioner Vs Anbu Motors (Madras High Court)
Madras High Court has dismissed an appeal filed by the Principal Chief Commissioner against M/s. Anbu Motors, deeming it infructuous. The case centered on the filing of TRAN-1 declarations by taxpayers to transition input tax credit from the previous tax regime (TNVAT Act) to the Goods and Services Tax (GST) regime under Section 140 of the CGST Act, 2017.
Initially, the statute prescribed a 90-day window from July 1, 2017, for filing these declarations. However, the court acknowledged the widespread technical difficulties experienced on the GST portal during this period, which prevented many businesses, including Anbu Motors, from complying with the deadline.
Anbu Motors had initially filed a writ petition before a single judge of the Madras High Court seeking relief due to these technical glitches. The single judge allowed the petition on November 1, 2018, presumably directing the department to permit the filing of the TRAN-1 form despite the expiry of the initial time limit.
Aggrieved by this decision, the department filed the present appeal before the division bench of the Madras High Court.
While the appeal was pending, the issue of transitional credit and the difficulties in filing TRAN-1 forms reached the Supreme Court of India. The apex court, in the case of Union of India & Another V. FILCO Trade Centre Pvt. Ltd. & Another, reported in 2022 (7) TMI 1232, addressed the prevailing circumstances.
Recognizing the technical issues that had affected taxpayers nationwide, the Supreme Court issued significant directions on July 22, 2022 (with a subsequent order on September 2, 2022). The court directed the Goods and Service Tax Network (GSTN) to reopen the common portal specifically for filing or revising TRAN-1 and TRAN-2 forms for a period of two months, from September 1, 2022, to October 31, 2022.
The Supreme Court’s order was comprehensive, stating that any aggrieved registered assessee could file or revise their forms during this period, irrespective of whether they had filed a writ petition in a High Court or if their case had been dealt with by the Information Technology Grievance Redressal Committee (ITGRC). The court also mandated GSTN to ensure that no technical glitches occurred during this extended filing window.
Furthermore, the Supreme Court directed the concerned tax officers to verify the claims for transitional credit within 90 days after the portal closed, pass appropriate orders on the merits after granting a reasonable opportunity to the taxpayers, and reflect the allowed credit in the electronic credit ledger. The court also suggested that the GST Council could issue guidelines for scrutinizing these claims. The Special Leave Petitions before the Supreme Court were disposed of with these directions.
Following the Supreme Court’s directive, the department issued Circular No. 180/12/2022-GST dated September 9, 2022, formally announcing the reopening of the web portal for filing TRAN-1 and TRAN-2 declarations in line with the apex court’s order.
Crucially, during this reopened window, Anbu Motors, the writ petitioner in the original case before the Madras High Court, was able to avail the facility and successfully file its TRAN-1 form.
Before the Madras High Court, both sides were heard in the appeal filed by the Principal Chief Commissioner. The court observed that as a result of the Supreme Court’s intervention and the subsequent filing of the TRAN-1 form by Anbu Motors, all the substantive issues that were raised in the original writ petition had been effectively resolved.
Given that the core grievance of Anbu Motors – the inability to file the TRAN-1 due to technical issues and the expiry of the deadline – had been addressed through the mechanism provided by the Supreme Court’s order and the department’s subsequent circular, the Madras High Court concluded that nothing further remained for adjudication in the appeal.
Consequently, the Madras High Court dismissed the department’s writ appeal as having become infructuous, meaning that the issues it sought to address were no longer live or relevant due to intervening events. No costs were imposed on either party. The connected miscellaneous petition was also closed.
This judgment highlights the impact of the Supreme Court’s intervention in the widespread issue of transitional credit challenges faced by taxpayers under the initial phase of GST implementation. The apex court’s direction to reopen the portal provided a resolution mechanism that rendered pending litigation on the same matter at lower levels of the judiciary redundant. The Madras High Court’s decision reflects the principle that once the substantive relief sought by a party has been obtained through an alternative or superior legal process, related proceedings may be rendered academic.
FULL TEXT OF THE JUDGMENT/ORDER OF MADRAS HIGH COURT
Heard both sides.
2. The case on hand involved the filing of TRAN-1 declaration in the web portal maintained by the appellants department. Section 140 of CGST Act 2017 enables transition of Input Tax Credit standing in the account of assessee under TNVAT Act into GST Regime. The statute however prescribed an outer time limit of 90 days with effect from 01.07.2017 to file TRAN-1 declaration form.
3. We can take judicial notice of the fact that during the relevant time, there were too many technical glitches which prevented the assessee from filing TRAN-1 declaration form. In this background, the present writ petition came to be filed and it was allowed by the learned single Judge on 01.11.2018. Aggrieved by the same, the department has filed this appeal. In the meanwhile, the matter went up to the Hon’ble Supreme Court. The Hon’ble Supreme Court in the decision reported in 2022 (7) TMI 1232 (Union of India & Another V. FILCO Trade Centre Pvt. Ltd. & Another) gave the following direction:-
“…
Having heard learned Additional Solicitor General, learned counsel appearing for different States and learned counsel appearing for different private parties and having perused the record, we are of the view that it is just and proper to issue the following directions in these cases:
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.
The Special Leave Petitions are disposed of accordingly.
Pending applications, if any, also stand disposed of.”
4. Pursuant to the said order of the Hon’ble Supreme Court, the department also issued Circular No.180/12/2022-GST dated 09.09.2022. Web portal was once again opened to enable the assessee to file TRAN-1 declaration form. The writ petitioner herein also availed the said facility and filed TRAN-1 form. All the issues raised in the writ petition have since been resolved. Therefore, nothing survives for further adjudication. This writ appeal is dismissed as infructuous. No costs. Consequently, connected miscellaneous petition is closed.
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