Case Law Details
Kalpaka Distrbutors Pvt Vs Union of India (Kerala High Court)
On a consideration of the facts and circumstances of the case and the submissions made across the bar, I find that since it is not in dispute that the petitioner herein did attempt to upload the necessary details in the system maintained by the respondents, and it cannot be disputed, based on a perusal of the system log, that the petitioner did attempt to log into the system, the mere fact that the petitioner cannot establish that the inability to upload the required details was on account of a system error that was occasioned by the respondents, cannot be a reason for denying him the substantive benefit of carrying forward the credit earned by him under the erstwhile regime.
I also take note of the decision of the Delhi High Court in Blue Bird Pure Pvt.Ltd. V. Union of India and Others [(2019) 68 GSTR 340 (Delhi)], and the decision of the Himachal Pradesh High Court dated 16.11.2019 in CWP No.2169 of 2018 (Jay Bee Industries Vs. Union of India and Others), which take the view that accrued tax credits cannot be denied or varied on account of procedural defects cited by the respondents.
In particular, it was noticed in those judgments that the GST system was still in a trial and error phase as far as its implementation was concerned, and there were a large number of dealers approaching the High Court expressing difficulties in filing return, claiming input tax credit etc., through the GST portal. In the said cases, the Writ petitions were allowed and a direction was issued to the respondents to permit the petitioners therein to file the TRAN -1 Form, either electronically or manually on or before 31.12.2019 without prejudice to the right of the respondent statutory authorities to verify the genuineness of the claim of the petitioners.
Taking cue from the said judgment, and finding that in the instant cases also there is no dispute with regard to the attempt made by the petitioner to log into the system on or before 27.12.2017, I allow this writ petition by quashing the impugned communications, and directing the respondents to permit the petitioner to file their TRAN-1 Forms either electronically or manually on or before 31.12.2019.
While the respondents shall attempt to facilitate the filing of these TRAN-1 Forms electronically by making the necessary arrangements in the web portal an insistence on manual filing shall be only in circumstances where the electronic filing is not possible. In either event, the respondents are at liberty to verify the genuineness of the claim of the petitioners and the claim shall not be denied only on the ground that the same was not filed before 27.12.2017.
FULL TEXT OF THE HIGH COURT ORDER / JUDGEMENT
The petitioner in this writ petition is an assessee under the Kerala Value Added Tax Act, 2003, who migrated to the GST regime pursuant to the enactment of the Central Goods and Service Tax/ State Goods and Service Tax (CGST/SGST) Act, 2017. The petitioner, consequent to their migration to the GST regime, was entitled to carry forward the tax paid on purchase of goods during the VAT regime to the GST regime and to avail credit under the latter regime. The transition provisions, which govern the transfer of credit under the CGST/SGST Act and Rules are Sections 139 to 143 of the Act and Rule 117 of the SGST Rules. As part of the procedure for the transfer of credit, the petitioners had to file a declaration in Form GST TRAN-1 on or before 27.12.2017 for the purposes of successfully migrating the credit to the GST regime. In this writ petition, the grievance of the petitioner is essentially that, while he attempted to upload the necessary details in the web portal of the GSTN, he was not able to do so because of a technical glitch that was encountered in the system. The request made by him before the respondent authorities under the GST Act also did not meet with any success, and the stand of the respondents was that since the petitioners had not complied with the procedural requirements before the cut-off date prescribed, they could not carry forward the credit, that had accrued to them under the erstwhile regime, into the GST regime. In this writ petition, the communications issued to him by the respondents denying him the facility of transfer of accrued credit are impugned, inter alia, on the contention that the substantial rights available to him under the GST Act cannot be deprived solely on account of a technical lapse that was occasioned at the instance of the respondents.
2. Through statements filed on behalf of the respondents, it is stated that the complaints with regard to system error and the alleged inability of assessees to upload the necessary details for carrying forward the credit earned by him under the erstwhile regime to the GST regime on or before 27.12.2017, were considered by the respondents, who have the wherewithal to ascertain whether an assessee had in fact made an attempt to log into the system or not. It is stated that system log maintained by the respondents clearly reveals cases where an assessee attempted to log into the system but failed, and also whether or not the inability of the assessee to upload the necessary details was on account of a system error or otherwise. It is stated that inasmuch as the system logs in the instant case reveals that the petitioner had in fact made an attempt to log into the system before 27.12.2017, his case would be covered by category B2, in the categorization drawn up by the respondents. It is stated that in the case of such assessees, while their attempt at logging in would be recorded by the system, it would have to be established that the inability to upload the details was on account of any system error occasioned at the instance of the respondents. In particular, the case of the petitioner herein is stated as follows:
“It is respectfully submitted that so far as the above Writ petition (GSTIN 32AAECK2911P1ZI) is concerned, the same has already been forwarded by GSTN as per CBIC’s Circular dated 03.04.2018 to ITGRC. The case of the petitioner was not approved in 4th ITGRC meeting under category B-2. As per GST System logs, the Petition saved record in TRAN-1 on 30 th Aug. 2017 at 11:57:47 AM. No technical error or technical issues has been observed in GST logs. Further, the Petitioner has successfully saved TRAN-1 only once and did not attempt saving or Filing of TRAN-1 subsequently. The current status of TRAN-1 is NOT FILED.”
3. I have heard the learned counsel appearing for the petitioner and the learned Standing Counsel appealing for the respondents.
4. On a consideration of the facts and circumstances of the case and the submissions made across the bar, I find that since it is not in dispute that the petitioner herein did attempt to upload the necessary details in the system maintained by the respondents, and it cannot be disputed, based on a perusal of the system log, that the petitioner did attempt to log into the system, the mere fact that the petitioner cannot establish that the inability to upload the required details was on account of a system error that was occasioned by the respondents, cannot be a reason for denying him the substantive benefit of carrying forward the credit earned by him under the erstwhile regime. I also take note of the decision of the Delhi High Court in Blue Bird Pure Pvt.Ltd. V. Union of India and Others [(2019) 68 GSTR 340 (Delhi)], and the decision of the Himachal Pradesh High Court dated 16.11.2019 in CWP No.2169 of 2018 (Jay Bee Industries Vs. Union of India and Others), which take the view that accrued tax credits cannot be denied or varied on account of procedural defects cited by the respondents. In particular, it was noticed in those judgments that the GST system was still in a trial and error phase as far as its implementation was concerned, and there were a large number of dealers approaching the High Court expressing difficulties in filing return, claiming input tax credit etc., through the GST portal. In the said cases, the Writ petitions were allowed and a direction was issued to the respondents to permit the petitioners therein to file the TRAN -1 Form, either electronically or manually on or before 31.12.2019 without prejudice to the right of the respondent statutory authorities to verify the genuineness of the claim of the petitioners. Taking cue from the said judgment, and finding that in the instant cases also there is no dispute with regard to the attempt made by the petitioner to log into the system on or before 27.12.2017, I allow this writ petition by quashing the impugned communications, and directing the respondents to permit the petitioner to file their TRAN-1 Forms either electronically or manually on or before 31.12.2019. While the respondents shall attempt to facilitate the filing of these TRAN-1 Forms electronically by making the necessary arrangements in the web portal an insistence on manual filing shall be only in circumstances where the electronic filing is not possible. In either event, the respondents are at liberty to verify the genuineness of the claim of the petitioners and the claim shall not be denied only on the ground that the same was not filed before 27.12.2017.
This writ petition is allowed on the above lines.
