Punjab and Haryana High Court permitted filing of TRAN-1 or revision of already filed TRAN- 1 by 30 th November, 2019

Tran 1

Hon’ble HC permitted filing or rectification of TRAN-01 by 30 th November, 2019. Respondents may verify genuineness of claim of Petitioners but nobody shall be denied to carry forward legitimate claim of CENVAT/ITC on the ground of non-filing of TRAN-1

Petitioner was registered under Central Excise Act or Finance Act, 1994 or State VAT Laws and on the appointed date, i.e., 1 st July, 2017, Petitioner was having accumulated ITC under pre-GST regime.

As per section 140 of CGST Act, 2017 read with Rule 117 and Rule 120 of CGST Rules, 2017, petitioner was permitted to carry forward ITC accumulated on appointed date to GST regime subject to filing of GST TRAN-1 on or before 27th December, 2019, further extended to 31 st March, 2019 in certain cases.

However, petitioner failed to file GST TRAN-1 or filed incorrect GST TRAN-1 by the specified due date.

Hon’ble high court held petitioner may have failed to file TRAN-01 or filed incorrect TRAN-01 as they may not be conversant with electronic system. However, ITC of taxes paid under pre-GST regime is a constitutionally vested right and it can’t be taken away on procedural or technical ground.

Accordingly, Hon’ble HC permitted filing or rectification of TRAN-01 by 30 th November, 2019. Respondents may verify genuineness of claim of Petitioners but nobody shall be denied to carry forward legitimate claim of CENVAT/ITC on the ground of non-filing of TRAN-1

1. Brief Facts of the case:

  • Petitioner was registered under erstwhile Central Excise Act or Finance Act, 1994 or respective state law.
  • On the date of implementation of GST, i.e., 01.07.2017, petitioner was either having closing stock of inputs or capital goods which has already suffered duty under erstwhile law or was having balance of unutilized balance of Input Tax credit availed under Central Excise law or Finance act, 1994 or Punjab VAT Act.
  • As per Section 140 of Central Goods and Service Tax Act, 2017 (“CGST Act, 2017), petitioner was allowed to carry forward unutilized Input Tax credit as on 30.06.2017 subject to fulfillment of conditions specified.
  • Section 140 does not provide for any time limit for availing credit. However, as per Rule 117 of CGST Rules, 2017, petitioner was required to file form GST TRAN-01 within 90 days from 01.07.2017 for the purpose of carry forward of unutilized ITC.
  • Due date of filing of GST TRAN-01 was extended till 27.12.2017. Due date was further extended till 31.03.2019 for such taxpayers who failed to load GST TRAN-01 by 27.12.2017 due to technical glitches.
  • As per Rule 120A of CGST Rule, 2017, registered person may submit revise GST TRAN-01 once within time period given under Rule 117.
  • In the given case, due to some or the other reasons, petitioner failed to file GST TRAN-01 or filed incorrect GST TRAN-01 by the above mentioned due dates.
  • Therefore, two types of petitioner have approached Hon’ble High Court namely
    • Registered persons failed to file GST TRAN-01 by 27.12.2017 and have no evidence of attempt to load or
    • Registered persons who loaded GST TRAN-01 by 27.12.2017 but with mistake and they want to revise it.

2. Legal Extracts:

  • Section 140 – Transitional Arrangement of Input Tax Credit” of the CGST Act, 2017 specified that every registered person is entitled to take CENVAT Credit carried forward in the return filed for the period ended on 30.06.2017 subject to fulfillment of specified conditions.
  • “Rule 117-Tax or duty credit forward under any existing law or on goods held in stock on the appointed day” specified:
    • Every registered person entitled to take credit under section 140 shall file an electronic declaration in GST TRAN-01 within 90 days from 01.07.2017.
    • Further, commissioner may extend such period of 90 days by further period not exceeding 90 days.
    • Commissioner may further extend due date of filing of GST TRAN-01 by a further period not beyond 31.03.2019 for such registered persons who failed to file declaration by 27.12.2019 due to technical glitches.
  • “Rule-120A-Revision of declaration in FORM GST TRAN-1” permitted that declaration file in form GST TRAN-01 within time specified in Rule 117 may revise once and submit the revise declaration within time specified in Rule 117.

3. Contention of the Petitioner:

Counsel of petitioner contended as follows:

  • For registered persons who failed to file GST TRAN-01 by 27.12.2017 and had no evidence of attempt to load, counsel of Petitioner contented that a lot of reasons are available for not filing GST TRAN-01 by 27.12.2017 such as
    • Press release showed last date  31.12.2017 instead of 27.12.2017
    • Utility for filing GST TRAN-01 was provided in September, 2017 instead of July, 2017
    • Heavy load on accountants who were having number of assesses
    • Lack of proper knowledge of computer
    • Complexity in filing different columns of GST TRAN-01
  • Taxpayers were not conversant with electronic system and due to complexity of for GST TRAN-01, petitioners filed incorrect GST TRAN-01.
  • Unutilised CENVAT credit accumulated in pre-GST Regime is a vested right of petitioners and therefore denial of will violate Article 14 and Article 300A of Constitution of India.
  • Lapse of CENVAT Credit will result in double taxation which can’t be permitted under any law.
  • Petitioners were duly registered with tax authorities under pre-GST regime and Respondent-department has complete record of such unutilized CENVAT/ITC thus department has no authority to deny credit on technical or procedural grounds.
  • Further, no section of CGST Law provides for lapse of CENVAT/ITC in case of non-filing of GST TRAN-01. Therefore, refund should be granted to petitioners if it is held that petitioner are not entitled to carry forward ITC .

4. Contention of Respondent:

Counsel of Respondent contended following points:

  • Government has extended due date of filing of GST TRAN-01 from time to time and it is a mistake on part of petitioner who did not made an attempt to load form by 27.12.2017.
  • There would be no end if petitioners are permitted to file GST TRAN-01 at this stage.
  • An opportunity was also given to the Petitioners to revise GST TRAN-01 and they failed to do so.

5. Interpretation of High Court:

  • GST law provided for an opportunity to carry forward unutilized ITC.
  • GST is an electronic based tax regime and most of the people of India are not conversant with electronic system. Most of us are not able to load simple forms electronically whereas there were a number of steps and columns in TRAN-1 forms thus possibility of mistake cannot be ruled out.
  • Denial of unutilized ITC would amount to violation of Article 14 and Article 300A of Constitution of India. Unutilized credit has been recognized as vested right and property in terms of Article 300A of the Constitution of India. (Division Bench of Gujrat High Court in the case of Siddharth Enterprises Vs The Nodal Officer)
  • Delhi High Court in the matter of Krish Authomotors Pvt. Ltd. Vs UOI and others directed respondent to permit petitioner to either submit GST TRAN-01 form electronically by opening the electronic portal for that purpose or allow the Petitioner to tender said form manually on or before 15th October, 2019

6. Conclusion:

  • Hon’ble High Court held that they find no reason for take contrary view as against given by Gujarat High Court & Delhi High Court.
  • Accordingly, directions were given to Respondent to permit petitioner to file or revise already file incorrect GST TRAN-01 either electronically or manually by 30.11.2019.
  • However, Respondent are at liberty to verify correctness of ITC Carried forward.

DISCLAIMER: The views expressed are strictly of the author and VJM & Associates LLP. The contents of this article are solely for informational purpose. It does not constitute professional advice or recommendation of firm. Neither the author nor firm and its affiliates accepts any liabilities for any loss or damage of any kind arising out of any information in this article nor for any actions taken in reliance thereon.

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