TRAN-1 can be filed upto 30.06.2020 : Delhi High Court
(Order pronounced on 05th May 2020)

BRAND EQUITY TREATIES LIMITED vs. THE UNION OF INDIA & ORS.

MICROMAX INFORMATICS LTD. vs. UNION OF INDIA & ANR.

DEVELOPER GROUP INDIA PRIVATE LIMITED vs. UNION OF INDIA & ORS.

RELIANCE ELEKTRIK WORKS vs. UNION OF INDIA & ORS.

Hon’ble High Court of Delhi has passed a landmark judgement and a combined order in the case of four assessees as mentioned above. The court held that period of 90 days for claiming input tax credit in TRAN-1 is directory and therefore period of limitation of 3 years under the Limitation Act would apply. The Court ordered that TRAN-1 can be filed upto 3 years from the appointed date under GST i.e. 01.07.2017. Since 3 years would end on 30.06.2020, therefore court directed the department to allow all the petitioners to file their TRAN-1 latest by 30.6.2020.

The interesting point in the order is that the court not only allowed the petitioners to file their TRAN-1, but also allowed all other assessees (who may not have been able to file earlier) to file TRAN-1 latest by 30.06.2020. 

The court further directed that department should publish this order on its website so that taxpayers may become aware of this ruling and may avail the benefit out of this. Thus this judgment has been made applicable to all assessees irrespective of whether the taxpayer has approached the court or not.

Rule 117 of CGST Rules is 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 the 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. Accordingly, since all the Petitioners have filed or attempted to file Form TRAN-1 within the aforesaid period of three years they shall be entitled to avail the Input Tax Credit accruing to them. They are thus, permitted to file relevant TRAN-1 Form on or before 30.06.2020. Respondents are directed to either open the online portal so as to enable the Petitioners to file declaration TRAN-1 electronically, or to accept the same manually. Respondents shall thereafter process the claims in accordance with law. We are also of the opinion that other taxpayers who are similarly situated should also be entitled to avail the benefit of this judgment. Therefore, Respondents are directed to publicise this judgment widely including by way of publishing the same on their website so that others who may not have been able to file TRAN-1 till date are permitted to do so on or before 30.06.2020.

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