Vikas Elastochem Agencies Private Limited Vs Deputy Commissioner Central Excise & GST (Madras High Court)
No doubt, the petitioner was required to file GST Tran 1 with correct information. However, the Courts have taken note of the fact that there were difficulties in making proper declarations in Tran 1 at the initial phase of implementation of the GST which had resulted in the denial of transitional credit to assesses.
Ultimately, these are the amounts which have accumulated prior to the introduction of the respective GST Act, 2017 with effect from 01.07.2017. The amount lying in the respective rules as it prevailed under the provisions of the Central Excise Rules, 2002 and CENVAT Tax liability.
The technical problem arose at the time of initial implementations of GST which resulted in difficulties both for the Assessee and the for the Department. Ultimately, the amounts which were available as input tax credit under the erstwhile Central Excise Rules, 2002 read with Cenvat Credit Rules were to be transited as their equivalent to cash to the extent and that they are available for being used for discharging the tax liability.
The procedure prescribed under the provisions of Central Goods and Service Tax Act, 2017 and the respective State Enactments and the Rules made there under should not come in the legitimate way of transitional credits as such credits were already available for being utilized for discharging the tax liability. These amounts cannot lapse. The difficulty in amending the Tran-1 is on account of the Architecture of the Web Portal which did not permitted the petitioner to make such amendments. The petitioner cannot be found fault of Architecture of the indefeasible and cannot lapse.
Considering the same, I am inclined to dispose this writ petition by directing the second respondent to take an independent decision by deputing a suitable officer from the Department to verify the petitioner indeed had un-utitlized accumulated credit for a sum of Rs.33,28,709.60 (Central Excise Credits Rs.24,81,347.10 and Customs Duty credits Rs.8,47,362.50]. The second respondent or any other Nodal officer may examine the issue and call upon the petitioner to produce their records and thereafter come to a proper conclusion as to whether the petitioner was indeed unable to transition the credit in time.
If the aforesaid amount of credit was available on 01.07.2017, the technical problem in the GST Portal may be internally resolved by the respondents by issuance of suitable directions in terms of decision of the Hon’ble Madurai Bench of this Court rendered in M/s. Ram Auto Vs. The Commissioner of Central Taxes and Central Excise and ors reported in 2021-VIL-192-Mad. This exercise shall be carried out by the of a copy of this order.
FULL TEXT OF THE JUDGMENT/ORDER OF MADRAS HIGH COURT
The petitioner was registered as a first stage dealer under the provisions of erstwhile Central Excise Rules 2002. The petitioner attempted to transition the credit of the input tax credit of the goods lying in stock in by filing Tran 1 on 10.11.2017. It is the case of the petitioner that instead of making a proper entry against 7(a) of Tran 1, the petitioner has made an entry in 7(d).
2. Since there was a mistake, the petitioner had sent a representation to the Principal Chief Commissioner, GST and Central Excise, the second respondent herein to permit the petitioner to make an appropriate corrections in Tran-1 Form filed electronically by the petitioner on 10.11.2017.
3. This application was made by the petitioner long after the time had expired for filing Tran-1 for making amendment in Tran-1 on 31.12.2017. Since the petitioner was unable to elicit any favourable response from the second respondent herein, the petitioner had filed W.P.No.8966 of 2019 for a mandamus to direct the first respondent herein to dispose of the representation dated 07.12.2018 of the petitioner submitted by the petitioner’s Chartered Accountant to process the GST Tran Credit amounting to Rs.33,28,709/-.
4. Initially, an interim order was passed by this Court on 20.03.2019 by directing the petitioner to appear before the second respondent on 27.03.2019 with the consequential direction to the second respondent to pass appropriate orders on the application dated 07.12.2018.
5. It appears that the second respondent in turn referred the matter to the IT Grievance Redressal in terms of goods Circular No.39/13/2018 dated 03.04.2018 and Standard Operating Procedure (SOP) for further examination by them for placing it before the IT Grievance Redressal Committee (IT-GRC) of GST Counsil for appropriate decision.
6. The learned counsel for the petitioner submits that the matter was considered at the 6th meeting of the IT Grievance Redressal Committee(IT-GRC) on 27.05.2019 at the GST Counsil Secretariat, New Delhi, of which the petitioner was unaware.
7. Under these circumstances, the petitioner proceeded to withdraw the writ petition filed by filing a memo under a bonafide relief that the petitioner will have given the appropriate relief when indeed the IT Grievance Redressal Committee(IT-GRC) in its 6th meeting held on 27th May 2019 had already decided to not to recommend the case favourably in its 32nd GST Council decision. The relevant portion of the decision of the IT Grievance Redressal Committee(IT-GRC) dated 27.05.2019 which is filed in the minutes of the 6th meeting is reproduced below:-
