$ 2 * IN HIGH COURT OF DELHI AT NEW DELHI Date of Decision: 12.12.2019 + W.P.(C) 8317/2019 VISION DISTRIBUTION PVT. LTD. ..... Petitioner Through: Mr. Ruchir Bhatia and Mr. Rakesh Kumar, Advocates. versus COMMISIONER, STATE GOODS & SERVICES TAX & ORS. ..... Respondents Through: Mr. Anuj Aggarwal and Mr. Ankit Monga, Advocates. Mr. Harpreet Singh, Senior Standing Counsel for R-1 & 2 with Mr. Arunesh Sharma and Ms. Suhani Mathur, Advocates. Mr. Amit Bansal, SSC with Mr. Aman Rewaria and Ms. Vipasha Mishra, Advocates for R-3. CORAM: HON'BLE MR. JUSTICE VIPIN SANGHI HON BLE MS. JUSTICE REKHA PALLI VIPIN SANGHI, J. (Oral): 1. We have heard learned counsels and proceed to dispose of present petition. Petitioner has preferred this petition to seek direction to Respondents to issue refund of Rs. 3,05,09,355/- to Petitioner. case of Petitioner is that it is engaged in business of sale and purchase of mobile phones. output supplies made by Petitioner are also in course of exports out of India. Petitioner states that it was W.P.(C) 8317/2019 Page 1 of 6 registered under provisions of Delhi Value Added Tax, 2014. When Goods and Services Tax Act was enforced w.e.f. 01.07.2017, Petitioner migrated to said system of taxation. Petitioner states that it was entitled to carry forward its electronic ledger account of unutilized Input Tax Credit (ITC) in terms of Section 140 of CGST Act, 2017. As on 01.07.2017, in terms of Section 140 of CGST Act, Petitioner claims that it was entitled to CGST credit of Rs. 3,13,06,050/-. Petitioner points out that in terms of rule 117 of CGST Rules, credit of input tax could be submitted in Form GST TRAN-1 within ninety days of appointed date which was 01.07.2017. Consequently, last date for submission of Form GST TRAN-1 was 28.09.2017. However, admittedly, Form GST TRAN-1 was not made available on web portal of Respondents upto 25.08.2017. On account of aforesaid lapse on part of Respondents, Petitioner could not upload its Form GST TRAN-1 either in month of July, 2017, or for most part of month of August 2017. However, business activity of Petitioner continued, namely, of undertaking exports. Petitioner states that in month of July, 2017 it made exports entailing deposit of tax in cash to tune of Rs. 1,37,37,029/, even though Petitioner was entitled to CGST credit of Rs.3,13,06,050/- as noticed hereinabove, as on 01.07.2017. 2. grievance of Petitioner is that due to inaction of Respondents and their failure to allow smooth migration of credit standing in Petitioner s account of unutilized input tax, Petitioner could not use and exploit Input Tax Credit while making exports in months of July and August, 2017 and was forced to shell out amount of W.P.(C) 8317/2019 Page 2 of 6 Rs. 1,37,37,029/-, which would not have been case, had Petitioner been able to utilize its Income tax Credit which had accumulated even prior to enforcement of GST regime. 3. Petitioner has claimed refund of said amount of Rs. 1,37,37,029/- as also Input Tax Credit earned on zero rated supplies made in months of July and August, 2017 which were Rs. 50,42,831/- for month of July 2017 and Rs. 1,17,29,495/- for month of August 2017, aggregating to Rs. 3,05,09,355/-. 4. Mr. Harpreet Singh, learned Senior Standing Counsel for Respondents submits that Petitioner uploaded Form GST TRAN-1 only in month of December, 2017, even though it was possible for Petitioner to upload same from 28.08.2017 onwards. He does not dispute fact that Petitioner could not utilize accumulated transitional credit which was accumulated prior to coming into force of GST regime, during months of July and August, 2017. He submits that those who filed their Form GST TRAN-1 from 25.08.2017 onwards, got credit in their ITC ledger in respective months, for utilization. 5. Mr. Singh further submits that under GST regime, there is no provision for grant of refund of accumulated ITC and result of Petitioner of paying tax in cash to tune of Rs. 1,37,37,029/- has been that Petitioner has earned ITC for equivalent amount which is lying credited in its ITC ledger from November 2017 onwards, and it is open to Petitioner to utilize same in future. Mr. Singh submits that for W.P.(C) 8317/2019 Page 3 of 6 months of July and August, 2017 there was no unutilized credit lying in ledger account of Petitioner and, therefore, there is no question of granting any refund to Petitioner at this stage in respect of any amount, including amount claimed to have been deposited in cash of Rs. 1,37,37,029/-. He submits that under Rule 86 (3) of CGST Rules, where registered person claims refund on any unutilized amount from electronic credit ledger in accordance with provisions of Section 54, amount to extent of claim is required to be debited in said ledger. In case assessee claims refund for months of July and August, 2017, there has to be unutilized ITC credit lying in electronic credit ledger of assessee for said months, which is not case. 6. On query by Court, Mr. Ruchir Bhatia, learned counsel for Petitioner points out that ITC lying in Petitioner s ledger account has swollen to tune of more than Rs. 7 crores on account of lack of avenues for it to be utilized. 7. Having heard learned counsels, we are inclined to direct partial refund of amount claimed by Petitioner. We are of view that Petitioner cannot be made to suffer on account of failure on part of Respondents in devising smooth transition to GST regime w.e.f. 01.07.2017, from erstwhile indirect taxation structure. Petitioner, being exporter under GST regime is entitled to undertake zero rated supplies. Petitioner claims to have undertaken exports in months of July and August, 2017 and since its unutilized Input Tax Credit to tune of Rs. 3,13,06,050/-, which was accumulated up to June, 2017, was not reflected in W.P.(C) 8317/2019 Page 4 of 6 its ITC ledger as on 01.07.2017, it could not utilize same w.e.f. 01.07.2017. same resulted in Petitioner having to shell out, in cash, Rs. 1,37,37,029/- which would not have been required, had Respondents taken care to ensure that Petitioner was able to utilize its accumulated Input Tax Credit in said months. Even Form GST TRAN-1 was made available on portal of Respondents only from 25.08.2017. business activity in country could not be expected to come to standstill, only to await Respondents making GST system workable. failure of Respondents in first putting workable system in place, before implementing GST regime, reflects poorly on concern that Respondents have shown to difficulties that trade faced throughout length and breadth of country. Unfortunately, even after passage of over two years, Respondents have not remedied their omissions and failures by taking corrective steps. They continue to take shelter of limitations in, and inability of their software systems to grant refund, despite same being justified. rights of parties cannot be subjugated to poor and inefficient software systems adopted by Respondents. software systems adopted by Respondents have to be in tune with law, and not vice versa. system limitations cannot be justification to deny relief, to which Petitioner is legally entitled. We, therefore, reject hyper technical objections sought to be raised by Respondents - to effect, that no refund can be granted, because system did not reflect any credit lying in ITC ledger of Petitioner for months of July and August, 2017. If that is so, it is entirely Respondents making. In fact, to permit Respondents to get away with such argument would be putting premium on inefficiency. We therefore, W.P.(C) 8317/2019 Page 5 of 6 reject submission. 8. Petitioner claims that it is entitled to complete refund of Rs. 3,05,09,355/- as explained hereinabove. So far as Petitioner s claim for refund of cash deposit to tune of Rs. 1,37,37,029/- is concerned, that, in our view can certainly not be denied to him. For aforesaid reasons, we direct Respondents to refund amount Rs. 1,37,37,029/- to Petitioner within four week from today. While making refunds, it shall be open to Respondents to debit Petitioner s ITC ledger by same amount. This is also agreeable to Petitioner. So far as Petitioner s claim for refund of remaining amount is concerned, Petitioner has already submitted documents in that regard. Respondents are directed to pass reasoned order on same within four weeks. 9. petition is disposed on in above terms. VIPIN SANGHI, J REKHA PALLI, J DECEMBER 12, 2019 nk W.P.(C) 8317/2019 Page 6 of 6 Vision Distribution Pvt. Ltd. v. Commissioner, State Goods & Service Tax & Or