C/SCA/7347/2019 ORDER IN HIGH COURT OF GUJARAT AT AHMEDABAD R/SPECIAL CIVIL APPLICATION NO. 7347 of 2019 M/S KAMBAY AROMATICS Versus UNION OF INDIA Appearance: ANANDODAYA S MISHRA(8038) for Petitioner(s) No. 1 MR CHINTAN DAVE, AGP(1) for Respondent(s) No. 2 NOTICE SERVED(4) for Respondent(s) No. 3 VIRAL K SHAH(5210) for Respondent(s) No. 1 CORAM: HONOURABLE MR.JUSTICE J.B.PARDIWALA and HONOURABLE MR. JUSTICE BHARGAV D. KARIA Date : 11/03/2020 ORAL ORDER (PER : HONOURABLE MR. JUSTICE BHARGAV D. KARIA) 1 Rule returnable forthwith. Learned advocate Mr. Viral Shah waives service of notice of rule for and on behalf of respondents No.1 and 3 and learned Assistant Government Pleader Mr. Chintan Dave waives service of notice of rule for and on behalf of respondent No.2. 2 By this petition under Article 226 of Constitution of India, petitioner has prayed for following reliefs: A. That this Hon'ble Court may be pleased to issue appropriate writ of mandamus or writ in nature of mandamus or any other appropriate writ, order or direction under Article 226 of Constitution of India, ordering and directing respondents themselves, their officers and subordinate to act upon or either allow petitioner to carry forward credit or to pay amount of credit in cash. B. And pass, such further order/orders for granting relief(s) as this Page 1 of 6 Downloaded on : Thu Jul 01 10:22:50 IST 2021 C/SCA/7347/2019 ORDER Hon'ble Court may deem fit and proper in facts and circumstances of case to meet ends of justice. 3 petitioner is registered under provisions of Excise Act and under provisions of Gujarat Value Added Tax Act, 2003. 4 It is case of petitioner that Section 140 of Central Goods and Services Act, 2017 [for short, 'the Act, 2017'] provides that petitioner is entitled to carry forward credit of CENVAT as available / admissible on day immediately preceding appointed day i.e. 1st July 2017 read with Rule 117 of Central Goods and Services Tax Rules, 2017 [for short, 'the Rule 2017']. According to petitioner, petitioner tried to upload form GST TRAN 1 to claim CENVAT credit amounting to Rs.16,88,141/ and Rs.1,02,865/ as credit of Value Added Tax for their firm. However, due to technical glitches in GST portal, petitioner could not file / upload form GST TRAN 1. 5 It is case of petitioner that time and again petitioner approached GST Department as well as jurisdictional Nodal Officer appointed by GST Department for redressal of its grievances. In spite of efforts made by petitioner, case of petitioner was not considered by competent authority so as to enable petitioner to claim credit of CENVAT in view of transitional provisions of Section 140 of Act, 2017 as on 1st July 2017. Learned advocate Mr. Mishra for petitioner submitted that petitioner is entitled to credit of CENVAT as well as service tax as on 30th June 2017 as per provisions under Section 140(1) of Act, 2017 read with Rule 117 of Rules 2017. 6 Learned advocate for petitioner relied upon decision of Coordinate Bench of this Court in case of M/s Siddharth Page 2 of 6 Downloaded on : Thu Jul 01 10:22:50 IST 2021 C/SCA/7347/2019 ORDER Enterprises vs. Nodal Officer in Special Civil Application No.5758 of 2019 and allied matters decided on 6th September 2019, wherein it is held that petitioner is entitled to transitional credit of CENVAT as well as service tax as it is legitimate right of petitioner to carry forward credit of CENVAT as well as service tax under Act, 2017: 38 By not allowing right to carry forward CENVAT credit for not being able to file form GST Tran 1 within due date may severely dent writ applicants working capital and may diminish their ability to continue with business. Such action violates mandate of Article 19(1)(g) of Constitution of India. 39 This High Court, in case of Indsur Global Ltd. v. Union of India, reported in 2014 (310) E.L.T. 833 (Gujarat), has held as under: 34. By no stretch of imagination, restriction imposed under sub rule (3A) of Rule 8 to extend it requires defaulter irrespective of its extent, nature and reason for default to pay excise duty without availing Cenvat credit to his account can be stated to be reasonable restriction. It leads to situation so harsh and position so unenviable that it would be virtually impossible for assessee who is trapped in whirlpool to get out of his financial difficulties. This is quite apart from being wholly reasonable, being irrational and arbitrary and therefore, violative of Article 14 of Constitution. It prevents him from availing credit of duty already paid by him. It also is serious affront to his right to carry on his trade or business guaranteed under Article 19(1)(g) of Constitution. On both counts, therefore, that portion of sub rule (3A) of rule must fail. 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 Page 3 of 6 Downloaded on : Thu Jul 01 10:22:50 IST 2021 C/SCA/7347/2019 ORDER 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. 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. 7 Learned advocate for petitioner submitted that respondents may be directed to consider case of petitioner after verification of credit of CENVAT as well as service tax available to petitioner as on 1st July 2017 so as to enable petitioner to upload form GST TRAN 1 on or before 31st March 2020 in view of order No.01/2020 GST dated 7th February, 2020 issued by Government of India, Ministry of Finance. 8 On other hand, learned standing counsel Mr. Ankit Shah for respondents submitted that as per respondents, there are no technical glitches found in case of petitioner and therefore, petitioner was not allowed to upload form GST TRAN 1. On specific query put to learned advocate for respondents that Page 4 of 6 Downloaded on : Thu Jul 01 10:22:50 IST 2021 C/SCA/7347/2019 ORDER whether claim of transitional credit made by petitioner is genuine or not, he submitted that on verification of such claim, if it is found to be genuine, petitioner can file / upload GST TRAN 1. Learned standing counsel for respondents as regards genuineness claim submitted that same shall be looked into by respondent No.4. 9 Having considered submissions made by respective parties and having through materials on record, it appears that if petitioner could not upload form GST TRAN 1 due to technical glitches and in spite of various representations made by petitioner, he was not allowed to upload form GST TRAN 1. 10 In view of settled legal position as stated hereinabove, petitioner is entitled to claim credit of CENVAT as well as service tax as on 30th June 2017 as per provisions under Section 140(1) of Act, 2017 read with Rule 117 of Rules 2017. 11 In such circumstances, respondent No.4, who is jurisdictional officer, is directed to verify claim of credit of CENVAT and service tax of petitioner so as to enable petitioner to carry forward by filing / uploading form GST TRAN 1 on GST portal. 12 Reliance placed by petitioner on order No.01/2020 GST dated 7th February 2020 of Central Board of Indirect Taxes and Customs 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) Page 5 of 6 Downloaded on : Thu Jul 01 10:22:50 IST 2021 C/SCA/7347/2019 ORDER 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 In view of above facts, respondent No.4 shall complete exercise of verification and permit petitioner to upload form GST TRAN 1 within period of two seeks from date of receipt of writ of this order so that petitioner can upload form GST TRAN 1 on or before 31st March 2020. 14 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 6 of 6 Downloaded on : Thu Jul 01 10:22:50 IST 2021 Kambay Aromatics v. Union of India