Krishna Oleo Chemical India Limited v. Union of India
[Citation -2020-LL-0226-119]

Citation 2020-LL-0226-119
Appellant Name Krishna Oleo Chemical India Limited
Respondent Name Union of India
Court HIGH COURT OF GUJARAT AT AHMEDABAD
Relevant Act CGST
Date of Order 26/02/2020
Judgment View Judgment
Keyword Tags goods and services tax • procedural in nature • extension of time • input tax credit • double taxation • cenvat credit • sale of stock • ultra vires • time limit • due date


C/SCA/12297/2019 ORDER IN HIGH COURT OF GUJARAT AT AHMEDABAD R/SPECIAL CIVIL APPLICATION NO. 12297 of 2019 KRISHNA OLEO CHEMICAL INDIA LIMITED Versus UNION OF INDIA Appearance: MR AMAR N BHATT(160) for Petitioner(s) No. 1,2 MR KUNAL P VAISHNAV(5111) for Petitioner(s) No. 1,2 MR CHINTAN DAVE, AGP(1) for Respondent(s) No. 2,3 MR NIRZAR S DESAI(2117) for Respondent(s) No. 1,4 CORAM: HONOURABLE MR.JUSTICE J.B.PARDIWALA and HONOURABLE MR. JUSTICE BHARGAV D. KARIA Date : 26/02/2020 ORAL ORDER (PER : HONOURABLE MR. JUSTICE BHARGAV D. KARIA) 1 Rule returnable forthwith. Learned advocate Mr. Nirzar Desai waives service of notice of rule for and on behalf of respondents Nos.1 and 4. Learned A.G.P. Mr. Chintan Dave waives service of notice of rule for and on behalf of respondents Nos.2 and 3. 2 Having regard to controversy in narrow compass, with consent of learned advocates for parties, matter is taken up for final hearing. 3 By this petition under Article 226 of Constitution of India, petitioners have prayed for following reliefs: Page 1 of 9 Downloaded on : Fri Jun 18 09:55:13 IST 2021 C/SCA/12297/2019 ORDER (A) issue appropriate writ to command respondents to consider physical copy of Form GST TRAN 1 sent on 30/1/2019 at Annexure hereto and to give credit to petitioner No.1 with respect of input credit (CENVAT Credit) of amount of Rs.1,59,55,594/ and restrain respondent from cancelling GST registration and command respondent to square off amount of Rs.1,59,55,594/ of CENVAT Credit towards CGST liability, if any. Or in alternative (AA) command respondents to open Electronic Portal to enable petitioners to file GST TRAN 1 online. (B) During pendency and final disposal of this petition. i) direct respondents to consider physical copy of form GST TRAN 1 sent on 30/1/2019 at Annexure hereto and to give credit to petitioners with respect of input credit (CENVAT Credit) of amount of Rs.1,59,55,594/ . ii) direct respondents to open Electronic Portal to enable petitioners to file GST TRAN 1 online. iii) restrain respondents from taking any coercive action against petitioners pursuant to notice dated 13/06/2019 from raising demand ignoring amount of CENVAT Credit of Rs.1,59,55,594/ . iv) restrain respondent from cancelling GST registration and direct respondent to square off amount of Rs.1,59,55,594/ of CENVAT Credit towards CGST liability, if any. (D) award cost of this petition. 4 petitioner No.1 is limited company registered under Companies Act and has filed this petition through its Director. petitioners had closing carried forward CENVAT balance as on 30th June Page 2 of 9 Downloaded on : Fri Jun 18 09:55:13 IST 2021 C/SCA/12297/2019 ORDER 2017 amounting to Rs.1,59,55,594/ . 5 In view of coming into force Central Goods and Services Tax Act, 2017 (for short, 'the CGST Act, 2017'), petitioners were entitled to carry forward CENVAT credit in view of transitional provisions of Section 140 of CGST Act, 2017. Under Rule 117 of CGST Rules, 2017, petitioners were entitled to such input credit and were required to submit declaration electronically in form TRAN 1 within ninety days from appointed day i.e. 1st July 2017 subject to further extension which may be granted by Commissioner on recommendations of GST Council for submitting of such form TRAN 1. 6 It is case of petitioners that after period for submitting TRAN 1 was extended vide order No.9/2017 GST dated 15th November 2017 upto 27th December 2017, petitioners tried to log in form TRAN 1 on 14th November 2017, 20th December 2017 and 25th December 2017, but petitioners could not upload TRAN 1 due to technical glitch on online portal. 7 It is case of petitioners that whenever petitioner No.2 tried to upload form TRAN 1, message was received from portal of respondents that filing of declaration in form TRAN 1 is not available as due date was over. 8 petitioner No.2, therefore, sent complaint on 3rd December 2018 to Nodal Officer of respondents. It was again sent by reminder dated 30th January 2019 along with manually submission of form TRAN 1. petitioners were however not granted credit of CENVAT under CGST Act, 2017. Page 3 of 9 Downloaded on : Fri Jun 18 09:55:13 IST 2021 C/SCA/12297/2019 ORDER 9 It is case of petitioners that thereafter, petitioner No.2 again tried to upload form TRAN 1, but it could not do so as due date for upload of electronically form TRAN 1 was already over. 10 According to petitioners, Nodal Officer, Office of Commissioner of CGST Audit, gave final audit report on 19th June 2019 for audit period for financial year 2014 15 to 2017 18 (upto June 2017), under which only amount of Rs.61,605/ was to be paid by petitioners. petitioners, therefore, paid such amount. petitioners are, therefore, entitled to CENVAT credit as per register ER 1. 11 Learned advocate for petitioners submitted that there is no fault on part of petitioners so as to upload form TRAN 1 and only due to technical glitches on part of respondents, petitioners could not upload form TRAN 1. Learned advocate for petitioners relied upon decision of Coordinate Bench of this Court in case of M/s Siddharth Enterprises vs. Nodal Officer in Special Civil Application No.5758 of 2019 and allied matters decided on 6 th September 2019 to contend that respondents may be directed to permit petitioners for uploading declaration in form TRAN 1 so as to enable petitioners to claim credit of CENVAT as per Section 140 of CGST Act, 2017. It was further pointed out that review applications filed by respondents in aforesaid writ petition were also rejected vide order dated 14th February 2020. 12 Learned advocate for petitioners also relied upon order No.01/2020 GST dated 7th February 2020 of Central Board of Indirect Taxes and Customs with regard to extension of time limit for submitting declaration in form GST TRAN 1 under Rule 117(1A) of Central Page 4 of 9 Downloaded on : Fri Jun 18 09:55:13 IST 2021 C/SCA/12297/2019 ORDER Goods and Services Tax Rules, 2017, which reads as under: F. No.CBEC 20/06/17/2018 GST(pt. I) Government of India Ministry of Finance (Department of Revenue) (Central Board of Indirect Taxes and Customs) New Delhi, 7th February, 2020 Order No.01/2020 GST Subject : Extension of time limit for submitting declaration in Form GST TRAN 1 under Rule 117(1A) of Central Goods and Service Tax Rules, 2017 in certain cases In exercise of powers conferred by sub rule (1A) of Rule 117 of Central Goods and Services Tax Rules, 2017 read with Section 168 of Central Goods and Services Tax Act, 2017, on recommendations of Council, and its supersession of Order No.01/2019 GST dated 31.01.2019, except as respects things done or omitted to be done before such supersession, Commissioner hereby extends period for submitting declaration in FORM GST TRAN 1 till 31st March, 2020, for class of registered persons who could not submit said declaration by due date on account of technical difficulties on common portal and whose cases have been recommended by Council. Sd/ (Yogendra Garg) Principal Commissioner (GST) 13 It was, therefore, submitted that respondents may be directed to permit petitioners to upload form TRAN 1 to avail carry forward of CENVAT credit balance as on 30th June 2017. 14 On other hand, learned advocates for respondents submitted that it is true that petitioners could not upload form TRAN 1. However, it was submitted that necessary directions may be given to respondents to permit petitioners to upload declaration in form TRAN 1 in view of aforesaid order dated 7th February Page 5 of 9 Downloaded on : Fri Jun 18 09:55:13 IST 2021 C/SCA/12297/2019 ORDER 2020 issued by Central Board of Indirect Taxes and Customs extending time period to upload form TRAN 1. 15 Having heard learned advocates of respective parties and having gone through materials on record, only question which arises in this petition is whether petitioners are entitled to carry forward CENVAT Credit balance as on 30th June 2017 under Section 140 of CGST Act, 2017 in absence of uploading form TRAN 1 due to technical glitches. This question is no more res integra in view of decision of Coordinate Bench in case of Siddharth Enterprises (supra) as well as order passed in review applications. It is held in aforesaid judgement as under: 40. liability to pay GST on sale of stock carried forward from previous tax regime without corresponding input tax credit would lead to double taxation on same subject matter and, therefore, it is arbitrary and irrational. 41. C.B.E. & C. Flyer No.20, dated 1.1.2018 had clarified as under : (c) Credit on duty paid stock : registered taxable person. Other than manufacturer or service provider, may have duty paid goods in his stock on 1st July 2017. GST would be payable on all supplies of goods or services made after appointed day. It is not intention of Government to collect tax twice on same goods. Hence, in such cases, it has been provided that credit of duty/tax paid earlier would be admissible as credit. 42. Article 300A provides that no person shall be deprived of property saved by authority of law. While right to property is no longer fundamental right but it is still constitutional right. CENVAT credit earned under erstwhile Central Excise Law is property of writ applicants and it cannot be appropriated for merely failing to file declaration in absence of Law in this respect. It could have been appropriated by government by providing for same in CGST Act but it cannot be taken away by virtue of merely framing Rules in this regard. Page 6 of 9 Downloaded on : Fri Jun 18 09:55:13 IST 2021 C/SCA/12297/2019 ORDER 43. In result, all four writ applications succeed and are hereby allowed. respondents are directed to permit writ applicants to allow filing of declaration in form GST TRAN 1 and GST TRAN 2 so as to enable them to claim transitional credit of eligible duties in respect of inputs held in stock on appointed day in terms of Section 140(3) of Act. It is further declared that due date contemplated under Rule 117 of CGST Rules for purposes of claiming transitional credit is procedural in nature and thus should not be construed as mandatory provision. 16 In review applications filed by respondents, it is held as under: 5. Having heard learned counsel appearing for parties and having perused materials on record, we find substance in submissions made by Mr. Shraff, learned counsel for respondents herein. applicants have relied on case of Willowood Chemicals Pvt. Ltd. (supra). In that case, vires of Section 164 of CGST Act, 2017 was challenged and it was prayed that respondents be directed to allow petitioners to carry forward CENVAT credit in electronic credit ledger, available as on 30th June, 2017 in terms of Section 140(3) of Central Goods and Services Act, 2017, wherein co ordinate Bench had observed that time limit provision contained in Rule 117 of CGST Rules, 2017 is annihilated and cannot be seen as merely technical in nature and petition was dismissed. While in case of Jay Chemicals Industries Ltd. (supra), coordinate Bench had relied on judgment of Willowood Chemicals Pvt. Ltd. (supra) and stated that Bench do not find any scope for directing respondents to allow petitioners to correct TRAN 1 declaration already made. It was also observed that limited extension has been granted to cover cases where genuine hardships were felt in uploading said declaration due to technical glitches. In said case, writ applicant had filed writ application for declaring Rule 117 of CGST Rules, 2017 and form GST TRAN 1 as ultra vires to Section 140(5) and Section 164 of CGST Act, 2017 and offend Article 14, 19(1)(g), 265 and 300A of Constitution of India. 5.1 While in case on hand, this Court has not declared said Rule 117 of CGST Rules, 2017 neither this Court has ordered respondents to carry forward CENVAT credit beyond time limit, but in case on hand, respondents herein had tried to upload form GST TRAN 1, but it could not be filed on account of technical glitches in terms of poor network connectivity and other technical difficulties at common portal. Under circumstances, this Court has gone into question that in such circumstances what would be remedy if person who tries to follow Rule 117 of CGST Rules, 2017 but, without there being any Page 7 of 9 Downloaded on : Fri Jun 18 09:55:13 IST 2021 C/SCA/12297/2019 ORDER fault on his side he could not upload form due to technical glitches. Therefore, this Court has followed judgement in case of Filco Trade Centre Pvt. Ltd. (supra), wherein, after relying on number of judgements of Apex Court, coordinate Bench of this Court had followed consistent findings of Apex Court and held that right accrued to assessee on date when paid tax on raw materials or inputs and that right would continue by way of CENVAT credit. CENVAT credit is therefore indefeasible. Following said principle, this Court had directed applicants herein original respondents to permit respondents herein original petitioners to allow filing declaration form in GST TRAN 1 and GST TRAN 2, so as to enable them to claim transitional credit of eligible duties in respect of inputs held in stock on appointed day in terms of Section 140(3) of GST Act. co ordinate Bench has also observed in paragraph 32 as under : 32. For all these reasons we find that clause (iv) of subsection (3) of Section 140 is unconstitutional. We therefore strike down same. Petitions are allowed and disposed of. Thus, when co ordinate Bench had already declared clause (iv) of sub section (3) of Section 140 as unconstitutional, we do not have any hesitation to declare Rule 117 of CGST Rules, 2017 for purpose of claiming transitional credit as procedural in nature and should not be construed as mandatory provision. In two judgments of Coordinate Bench, which are relied on by applicant, above ratio of Apex Court is not followed and, therefore, we are of view that judgment in case of Filco Trade Center Pvt Ltd. vs. Union of India reported in 2018 (17) G.S.T.L. 3 (Guj.) would be applicable to facts of present case. In our order, we have already discussed judgment of Eicher Motors Ltd. vs. Union of India reported in 1999 (106) ELT 3 (SC) and in judgment rendered in case of Collector of Central Excise, Pune vs. Dai Ichi Karkaria Ltd. reported in [1999 (112) ELT 353 SC], which are also relied on by Coordinate Bench in case of Filco Trade Center Pvt Ltd. (supra). 17 Thus, dictum of law as declared in above decision would be applicable to facts of this case also as petitioners are not be able to upload form TRAN 1 due to technical glitches. 18 In view of foregoing reasons, respondents are directed to permit petitioners to upload declaration in form TRAN 1 and as Page 8 of 9 Downloaded on : Fri Jun 18 09:55:13 IST 2021 C/SCA/12297/2019 ORDER per order dated 7th February 2020 passed by Central Board of Indirect Taxes and Customs, petitioners will be entitled to upload Form TRAN 1 before 31st March 2020 to claim credit of CENVAT under Section 140(3) of CGST Act, 2017. Such exercise should be completed within two weeks from date of receipt of this order. 19 With aforesaid directions, petition stands disposed of. Rule is made absolute to aforesaid extent. Direct service is permitted. (J. B. PARDIWALA, J) (BHARGAV D. KARIA, J) CHANDRESH Page 9 of 9 Downloaded on : Fri Jun 18 09:55:13 IST 2021 Krishna Oleo Chemical India Limited v. Union of India
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