Supreme Court (SC) Judgment dated 8.3.2021 on Limitation period─Analysis & Impact on Transitional Credit – In the wake of Covid-19 pandemic

Looking to the onset of COVID-19 pandemic and various measures taken by the Govt. to curb COVID-19, from time to time, the Hon’ble Supreme Court took suo motu Cognizance for Extension of Limitation, in the wake of situation coupled with difficulties faced by the litigants across the country. The theme of the Hon’ble Supreme Court directions issued in their order dated 8.3.2021 – Re: Cognizance for extension of limitation [Suo Motu Writ Petition (Civil) No.3 of 2020, decided on March 8, 2021]  centered around to ease the hardship being faced by the citizens of the country.

On the other side, the CBIC during the period of COVID-19 pandemic, implemented w.e.f. 18.5.2020, the restriction on time limit for taking Transitional Credit, u/s 140, CGST Act, 2017, amended retrospectively by the Finance Act, 2020, just to plug/annul the relief given by various courts to the taxable persons and also filed SLP in the Supreme Court on 19.6.2020 : Union of India & Ors. v. Brand Equity Treaties Ltd. & Ors. (2020) 33 J.K.Jain’s GST & VR 419 & obtained Stay against the High Court judgment in the case of Brand Equity Treaties Ltd. v. Union of India (2020) 33 J.K.Jain’s GST & VR 419 (Delhi), which granted a great relief to various citizens of the country by prescribing the period of limitation of 3 years under the Limitation Act for filing Tran-1 so as to facilitate claiming Transitional Credit as on 30.6.2017, u/s 140, CGST Act, 2017. In the wake of directions issued by the Hon’ble Supreme Court, this period of limitation of 3 years stood extended up to 14.3.2021.

Such type of non friendly approach of CBIC is against the directions dated 8.3.2021, now issued by the Hon’ble Supreme Court.

In our view, the CBIC should amend the date of implementation of  amendment carried out retrospectively by the Finance Act, 2020, in respect of the restriction on time limit for taking Transitional Credit, u/s 140, CGST Act, 2017, in the wake of directions of the Hon’ble Supreme Court to afford justice to various citizens of the country. At the same time, the CBIC should withdraw the SLP filed in the Supreme Court on 19.6.2020, looking to the difficulties faced by the various citizens of the country during COVID-19 pandemic, in tune with the directions of the Hon’ble Supreme Court

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