Case Law Details
Subhas & Company Vs Commissioner of CGST (Calcutta High Court)
The issue under consideration is whether the petitioner is entitled to get an opportunity to file the declaration in CGST TRAN –2 in order to be allowed to take transitional Credit on account of inputs held in stock as on the appointed date?
In present case, in order to comply with the GST regime the petitioner, duly filled up an SGST TRAN-I within time and mentioned all the details required to be filled up in said SGST. In order to claim the transitional credit in case of stock of goods as on the appointed date but while trying to file a GST TRAN-II the same could not be filed because the utility was not availed till 27 December 2017. The utility was made available only after the due date to file GST TRAN-I. Even after the due date technical issues while filing the transitional form in FORM GST TRAN-I and TRAN-II was there and hence could not file the same within the stipulated due date.
High Court states that the provisions of transitional credit being directory in nature, insofar as it prescribes the time-limit for transitioning of credit and therefore, the same would not result in the forfeiture of the rights, in case the credit is not availed within the period prescribed. This, however, does not mean that the availing of CENVAT credit can be in perpetuity. Transitory provisions, as the word indicates have to be given its due meaning. Transition from pre-GST Regime to GST Regime has not been smooth and therefore, what was reasonable in ideal circumstances is not in the current situation. In absence of any specific provisions under the Act, HC would have to hold that in terms of 0the residuary provisions of the Limitation Act, the period of three years should be the guiding principle and thus a period of three years from the appointed date would be the maximum period for availing of such credit. The petitioner has attempted to file TRAN within the time limit framed under the Rule. In the context of what has been stated discussed above, this court directs the respondent authorities to reopen the form TRAN II or accept manual filing of GST TRAN II to allow the petitioner to claim transitional credit held in stock as on the appointed date after proper verification including the invoices submitted by the petitioner. It is made hereby clear that such exercise has to be completed within 30.06.2020 so as to enable the petitioner to submit his GST TRAN II.
FULL TEXT OF THE HIGH COURT ORDER /JUDGEMENT
For the petitioner Learned advocate-on-record of the petitioner undertakes to affirm and stamp the petition as per the Rules within 48 hours of resumption of normal functioning of the Court. The petition is taken up through video conference on the basis of such undertaking.
The points of law is that the writ petitioner has raised in this writ petition whether the non-allowance of transitional Credit on account of inputs held in stock as on the appointed date under Section 140(3) of the CGST/SGST Act, 2017 due to inability to file GST TRAN-2 before the due date as provided for in Rule 117 (4) of the CGST/SGST Rules, 2017 is violative of Articles 14, 19(1) (g) and 265 of the Constitution of India and is grossly against the principles of natural justice and whether the petitioner is entitled to get an opportunity to file the declaration in CGST TRAN –2 in order to be allowed to take transitional Credit on account of inputs held in stock as on the appointed date.
The petitioner was a dealer registered under the West Bengal Value Added Tax Act, 2003 bearing VAT No.19520282038. By duly migrating to the Goods and Services Tax Acts, the petitioner is a registered dealer under the Central Goods and Services Tax Act, 2017 (hereinafter referred to as the CGST Act, 2017) and the West Bengal Goods and Services Tax Act, 2017 (hereinafter referred to as the WBGST Act, 2017) bearing GSTIN – 19AAMFS4896E1ZJ under both the Acts which was obtained by migration from the previous Acts. The petitioner is a bona fide dealer who carries on business in due compliance of the provisions of the Goods and Services Tax (for brevity, GST) laws in force staying within the legal ambit of the laws and rules framed thereunder.
Mr. Akshat Agarwal, learned advocate for the writ petitioner submits that service has been effected through e- mail. None has entered appearance on behalf of the respondents. The point in issue can be decided in one go and the writ petition can be disposed of. The petitioner states that the Government of India came out with the biggest tax reform in the arena of Indirect Taxation in the year 2017. On 1st July, 2017, the Government of India gave effect to the CGST laws of which one was the CGST Act and State of West Bengal passed the WBGST Act. In the WBGST Act, 2017, Chapter XX provided for Transitional provisions by way of which a registered dealer under CGST was allowed to avail the claim of Input Tax Credit (for brevity, ITC) as brought for forward from the previous Acts. Along with the transitional credit as carried forward from the previous regime(s), the said Chapter XX also provided for allowance of transitional credit on account of goods held in stock as on the appointed date i.e. 1st July 2017, which is stated under Section 140(3) of the WBGST Act, 2017, hereunder.
“(3) A registered person, who was not liable to be registered under the existing law or who was engaged in the sale of exempted goods or tax free goods, by whatever name called or goods which have suffered tax at the first point of their sale in the State and the subsequent sales of which are not subject to tax in the State under the existing law but which are liable to tax under this Act or where the person was entitled to the credit of input tax at the time of sale of goods, if any, shall be entitled to take, in his electronic credit ledger, credit of the value added tax in respect of inputs held in stock and inputs contained in semi-finished or finished goods held in stock on the appointed day subject to the following conditions namely:-
(i) such inputs or goods are used or intended to be used for making taxable supplies under this Act;
(ii) the said registered person is eligible for input tax credit on such inputs under this Act;
(iii) the said registered person is in possession of invoice or other prescribed documents evidencing payment of tax under the existing law in respect of such inputs; and
(iv) such invoices or other prescribed documents were issued not earlier than twelve months immediately preceding the appointed. Provided that where a registered person, other than a manufacturer or a supplier of services, is not in possession of an invoice or any other documents evidencing payments of tax in respect of inputs, then, such registered person shall, subject to such conditions, limitations and safeguards as may be prescribed, including that the said taxable person shall pass on the benefit of such credit by way of reduced prices to the recipient be allowed to take credit at such rate and in such manner as may be prescribed. Therefore, as per said rule the registered dealer had to furnish details of the stock of goods held in stock on the appointed date at the end of the month and to furnish a statement in FORM GST TRAN- II accordingly.
In order to comply with the same the petitioner duly filled up a SGST TRAN-I within time and mentioned all the details required to be filled up in said SGST . In order to claim the transitional credit in case of stock of goods as on the appointed date but while trying to file a GST TRAN-II the same could not be filed because the utility was not availed till 27 December, 2017. The utility was made available only after the due date to file GST TRAN-I. Due to such reason the statement in form-GST TRAN-II could not be filed since utility aforesaid was not made available. The Government of India issued notification bearing No.281-FT dated 7th March, 2018 by way of which sub clause (iii) of clause-(b) of sub Rule 4 of Rule 117 of the WBGST Rules 2017 was substituted with immediate effect. Though over such substitution the assessees were directed to file GST TRAN-II within the time limit of 31st March, 2018 or within such time as may be extended by the respondent no.4. Even after the due date technical issues while filing the transitional form in FORM GST TRAN-I and TRAN-II and as such could not filed the same within the stipulated due date. Due to such issues many dealers moved before the Hon’ble Courts of law to avail the benefit of the transitional credit. Each and every court, thereafter, allowed the assesses to file GST TRAN-I after the due date by directing the GST network to reopen the portal so that the application may be filed online and if not, the assesees be allowed to file GST TRAN-I manually.
Accordingly, the petitioner has sought for issuance of writ in the nature of mandamus directing the respondents to reopen GST TRAN-II ought to accept manual TRAN-II to allow the petitioner to claim transitional credit on account of goods held in stock as on the appointed date and further allow the petitioner to set off transitional credit as claimed in GST with the tax liability under Goods & Services Tax Law without payment of interest.
In order to buttress the statement Mr. Agarwal learned advocate for the petitioner has invited my attention to the provisions under Section 140 of the West Bengal Goods and Services Tax Act, 2017 and Rule 117 and Chapter XIV relating to transitional provision being the rule framed thereunder and further by my attention is invited to various decisions of the Hon’ble High Court and so also observations made in M/s. Blue Bird Pure Pvt. Ltd. vs. Union of India, 2019 SCC Online 9250 where it is observed that Government has acknowledged that on account of technical difficulties, the tax payers were indeed unable to file the statutory form within time and CBIC vide notification issued from time to time, extended the date prescribed for filing of form GST TRAN- I under Rule 117(1A) of the CGST Rules and the period, as on date, was extended by various notifications reference is also made in unreported decision of the Hon’ble High Court of Delhi in Brand Equity Treaties Limited vs. The Union of India & Ors. wherein it has been specifically observed in paragraph 22 that the provision (Rule 117) as being directory in nature, insofar as it prescribes the time-limit for transitioning of credit and therefore, the same would not result in the forfeiture of the rights, in case the credit is not availed within the period prescribed. This, however, does not mean that the availing of CENVAT credit can be in perpetuity. Transitory provisions, as the word indicates have to be given its due meaning. Transition from pre-GST Regime to GST Regime has not been smooth and therefore, what was reasonable in ideal circumstances is not in the current situation. In absence of any specific provisions under the Act, we would have to hold that in terms of 0the residuary provisions of the Limitation Act, the period of three years should be the guiding principle and thus a period of three years from the appointed date would be the maximum period for availing of such credit. The petitioner has attempted to file TRAN within the time limit framed under the Rule. In the context of what has been stated discussed above, this court directs the respondent authorities to reopen the form TRAN II or accept manual filing of GST TRAN II to allow the petitioner to claim transitional credit held in stock as on the appointed date after proper verification including the invoices submitted by the petitioner. It is made hereby clear that such exercise has to be completed within 30.06.2020 so as to enable the petitioner to submit his GST TRAN II.
Thus the writ application being WP 5585(W)/2020 is disposed of. Consequently, the connected application being CAN 3323 of 2020 also stands disposed of.
Author Bio
