Another Chance to File TRAN-1 by 30th June, 2020: Says Delhi HC

Cases:

Hon’able Delhi High Court in a Landmark Judgement has responded to four (4) Writ petition of similar facts  as mentioned Below

1. BRAND EQUITY TREATIES LIMITED versus THE UNION OF INDIA & ORS.
   • W.P.(C) 11040/2018) and C.M. No. 42982/2018
2. MICROMAX INFORMATICS LTD. versus UNION OF INDIA & ANR.
   • W.P.(C) 196/2019& CM APPL. 965/2019
3. DEVELOPER GROUP INDIA PRIVATE LIMITED versus UNION OF INDIA & ORS.
   • W.P.(C) 8496/2019
4. RELIANCE ELEKTRIK WORKS versus UNION OF INDIA & ORS.
   • W.P.(C) 13203/2019

Facts and submissions:

Petitioners contempt’s avail input tax credit of the accumulated CENVAT credit as of 30th June, 2017 by filing declaration Form TRAN-1 beyond the period provided under the Central Goods and Services Tax Rules, 2017 (hereinafter, the “CGST Rules”).

Additionally, petitioners also assail Rule 117 of the CGST Rules on the ground that it is arbitrary, unconstitutional and violative of Article 14 to the extent it imposes a time limit for carrying forward the CENVAT credit to the GST regime.

The accumulated CENVAT credit is the property of the assessee and a constitutionally protected right under Article 300A of the Constitution, which cannot be taken away by framing Rules without there being any substantive provision in this regard under the Act.

Judgement: 

• Technical difficulties cannot be restricted only to a difficulty faced by or on the part of the respondent. It would include within its purview any such technical difficulties faced by the taxpayers as well
• that period of 90 days for claiming Input Tax Credit (ITC) in FORM TRAN-01 is procedural directory and can not affect the substantive right of the taxpayer to avail the existing / accrued and vested CENVAT credit.
• The procedure could not run contrary to the substantive right vested under sub Section (1) of Section 140.
• In absence of any consequence being provided under Section 140, to the delayed filing of TRAN-1 Form, Rule 117 has to be read and understood as directory and not mandatory.
• 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 (i.e. Government) 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.

Among other things, court also stated that “We are also of the opinion that other taxpayers who are similarly situated should also be entitled to avail the benefit of this judgment.”

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