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Revenue's petition opposing the direction given by learned single judge of High Court to GST department to consider the taxpayers request for transitional credit dismissed by High Court.  

The issue raised in this writ appeal being technical in nature, it is only in the interest of all that such technical issues do not stand in the way of rendering justice. We are constrained to observe that the revenue ought not to have pursued this appeal, wasting judicial time and energy.

- High Court (Double Bench)

The present writ petition is filed by revenue being aggrieved by the direction of the learned Single Judge of Keral High Court to the IT Redressal Committee of the GST Council to consider taxpayer's request for the transition of unavailed input tax credit in accordance with law.

Background of the case (High Court - Single Judge)

The original writ petition was filed by the taxpayer seeking a direction for credit of the input tax balance lying in the writ petitioner’s CENVAT Credit Ledger as on 30-06-2017 to its Electronic Credit Ledger under the GST regime. It was pleaded that, to avail the transitional benefit of transfer of unavailed CENVAT credit to the electronic credit ledger under the GST regime, the taxpayer had attempted to file GST TRAN-1 Form on 26-09-2017 though without success. Further attempts also ended in failure resulting in the writ petitioner unable to take credit of the input tax balance lying in its CENVAT credit ledger as on 30.6.2017 to the electronic credit ledger. Petitioner had received the communication “processed with error” while attempting to submit TRAN-1 Form and thereafter a complaint was sent by email to It was alleged that there was no reply and hence the writ petition was filed.

A statement was filed on behalf of revenue, pointing out that the attempt of the taxpayer was to subvert the statutory limitation and that as per Rule 117 of the CGST Rules 2017, the electronic filing of Form TRAN-1 ought to have been done within the stipulated period of 90 days from 21-07-2017. It was further stated that, even though the last date for filing of the form was extended from time to time, the present attempt was highly belated. It was further stated that there was nothing on record to suggest that throughout the period from 01-07-2017 to 27-12-2017, petitioner had made any effort to file the TRAN-1 declaration.

As mentioned earlier, the learned Single Judge disposed of the writ petition directing the IT Redressal Committee of the GST Council to take a call on the writ petitioner's request after taking into consideration the provisions under section 140 of the Central Goods and Service Tax Act, 2017 within a period of 45 days from the date of receipt of the judgment after affording an opportunity of hearing.

Held by High Court (Double Bench)

Under section 140 of the CGST Act, registered persons are eligible to carry forward unutilized CENVAT credit and credit of duties or taxes paid on inputs/capital goods. No time limit is specified under the said provision to carry forward unutilized credit. However Rule 117 of CGST Rules provide for a period of 90 days from the appointed day, i.e, 01-07-2017. This period was extended till 27-12-2017 and thereafter by Rule 117(1A) the Commissioner's were given the power to extend the time till 31.08.2020.

It is significant to note that the statute does not provide for any provision for lapsing of unutilized input tax credit for non filing of TRAN-1. The input tax credit is required by law to be credited to the electronic credit ledger of an assessee. Failure to credit the input tax credit is an infraction of section 140(1) and to Rule 117(3) of the GST Rules. Input tax credit is an asset in the hands of the dealer. A registered dealer had a statutory right under the VAT regime to get refund. Unutilized input tax credit of the erstwhile regime can be denied from being credited to the electronic credit ledger only under the contingencies mentioned in the proviso to section 140(1). On all other situations, this statutory right cannot be defeated by any procedural rules under the GST regime. In this context, we bear in mind the salutary principles enshrined in Article 265 and Article 300A of the Constitution of India also.

It is axiomatic that computer literacy has not reached its pinnacle in our country. Technical glitches at the transition stage to GST should not affect above said statutory right of dealers. Attempt must always be made not to deprive a dealer from a bonafide claim, through technicalities. In the wake of the transition period to GST and the switching over to the electronic portal, admittedly glitches had occurred. In such instances, the department should have, while assisting the assessees, acted with alacrity and promptness rather than deny bonafide claims.

The issue raised in this writ appeal being technical in nature, it is only in the interest of all that such technical issues do not stand in the way of rendering justice. Keeping in perspective the contentions in the case, we are of the view that the impugned judgment does not reflect any error of law warranting an interference by this Court in appeal. In fact, the impugned judgment of the learned Single Judge being an innocuous one, we are constrained to observe that the respondents ought not to have pursued the same in appeal, wasting judicial time and energy.

Granting an opportunity of hearing is only to enable the process of decision-making simpler. It is one of the basic principles of natural justice. In the process of rendering justice, an opportunity of hearing is a basic postulate. The challenge now raised by the appellant against the opportunity of hearing directed to be afforded by the learned Single Judge in the impugned judgment is therefore not tenable.

In the said circumstances, we do not find any merit in this writ appeal and the same is dismissed.

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Jul 24, 2021


Is it a deliberate move of deptt or vested interest of some one to creat unneccessary litigation wasting time n resources
By: Anil Sharma | Dt: Jul 24, 2021
Deptt is in deep slumber with all fake claims and propaganda of Ease of Doing Business, just self-patting mode. Last 2 years have been one of the worst phases of CBIC with litigation for everything, even non-issues. Supreme Court Orders are not complied, high-handedness of CBIC abounds and CBIC is at its lowest ebb with malgovernance as order of the day. With every dispute, half-cooked, ill-drafted clarification Circulars or amendments are issued, which aggravate the problem rather than solving. Staff at lower level in GST department as well as trade is fed up with instructions changing everyday. Customs is sold out in the name of faceless assessment, where a new business channel of approaching assessment officers across the country has opened up and flourishes for striking deals. Fake dwell time studies are only meant self-congratulatory purpose. So much in the name of revenue where FM is smartly kept in the dark and smartly manipulated by the 'rulers' in the CBIC.
By: Bhaskar Venu | Dt: Jul 24, 2021

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