1 WP 6998.2018 final.doc JPP IN HIGH COURT OF JUDICATURE AT BOMBAY APPELLATE CIVIL JURISDICTION WRIT PETITION NO. 6998 OF 2018 Nelco Limited Company registered under Companies Act, 1956 having its office at Francysters Centre, 3rd Floor, Evcharistic Congress Bldg. No. III, 5 Convent Street, Colaba, Mumbai 400 001. Petitioner V/s. 1. Union of India through Revenue Secretary, Department of Revenue, Ministry of Finance having his office at 128-A/ North Block, New Delhi. 2. Central Board of Indirect Taxes and Customs through its Chairman having his office at North Block, New Delhi 110 001. 3. State of Maharashtra through Government Pleader, High Court, Mumbai 4. Goods and Services Tax Council having its office at 5th floor, Tower II, Jeevan Bharti Building, Janpath Road, Connaught Place, New Delhi 110001 2 WP 6998.2018 final.doc 5. Commissioner of State Tax having his office at 8th floor Vikrikar Bhavan, Mazgaon, Mumbai-400 010 6. Goods and Services Tax Network Private Limited Company registered under Companies Act, 1956 having its office at 4th floor, East Wing, World Mark-1, Aerocity, New Delhi 7. Superintendent, Range-V, Belapur-IV GST, Ground Floor, CGO Complex, CBD Belapur, New Mumbai. ... Respondents Mr. V. Sridharan, Senior Advocate a/w. Mr. Prakash Shah and Mr. Sriram Sridharan i/b. PDS Legal for Petitioner. Mr. Anil Singh, Addl. Solicitor General a/w. Mr. Pradeep S. Jetly, Senior Advocate a/w. Mr. J.B. Mishra for Respondents 1,2,4,6 & 7 Ms. Shruti D. Vyas, B Panel Counsel for Respondent No.3. CORAM : NITIN JAMDAR & M.S. KARNIK, JJ. RESERVED ON : 21 FEBRUARY 2020. PRONOUNCED ON : 20 MARCH 2020. JUDGMENT (PER NITIN JAMDAR, J.) :- Rule. Rule made returnable forthwith. Respondents waive service. Taken up for final disposal. 3 WP 6998.2018 final.doc 2. Petitioner - Nelco Limited is Company incorporated under Companies Act. It supplies and undertakes various network-related services. Respondent No.1 is Union of India. Respondent No.2 is Central Board of Indirect Taxes. Respondent No.3 is State of Maharashtra. Respondent No.4 is Goods and Services Tax Council. Respondent No.5 is officer exercising powers under Maharashtra Goods and Services Tax Act, 2017. Respondent No.6 is company which operates online portal known as GSTN. Respondent No.7 is Assessing Officer having jurisdiction over Petitioner. 3. Goods and Services Act was brought into force from 1 July 2017. This tax replaced and subsumed various indirect taxes in India. For transition between old and new regimes, provisions have been made under Act. Goods and Services Tax Act provides for utilization of Input Tax Credit accumulated under earlier tax laws upon certain conditions. Goods and Services Tax Rules framed under Act provides for filing of form known as GST TRAN-1 for availing of such input tax credit. Rules provide for time limit within which TRAN-1 Form has to be filed. This time limit is subject of debate in this Petition. 4. Goods and Service Tax is levied on supply of goods 4 WP 6998.2018 final.doc and services. It is destination-based consumption tax. GST has introduced unique concept where both, Central and State, levy taxes on joint base. GST levied by State Governments is called State GST, in short SGST. GST levied by Central Government is called Central GST, that is CGST. Regarding Inter-State supply, levy is called Integrated GST, IGST. GST has replaced various taxes collected by Central and State. CGST has subsumed Central Excise Duty, Additional Excise Duty, Service Tax, Additional Customs Duty, Special Additional Duty of Customs, Excise Duty on Medicinal & Toilet Preparations. SGST has subsumed Sales Tax, Value Added Tax, Entertainment Tax, Central Sales Tax, Octroi &, Entry Tax, Purchase Tax, Luxury Tax, Taxes on Lottery, Betting & Gambling. Goods and Services Tax Council is established. Council comprises of Union Finance Minister, Union Minister of State, Minister nominated by each State government. Out of several functions of GST Council, one of them is resolution of disputes. 5. timeline of statutory enactment as follows. On 19 June 2017 Central Goods and Services Tax Rules, 2017 were notified. Rule 117 was introduced on 28 June 2017 into CGST Rules with effect from 1 July 2017 to provide that every registered person may file TRAN-1 Form within 90 days of 1 July 2017. Rule 117(1) Proviso stipulated that Commissioner may on 5 WP 6998.2018 final.doc recommendations of GST Council extend this period by further 90 days. GST regime was implemented in country from 1 July 2017 with enactment of Central Goods and Services Tax Act, 2017 along with allied Central GST Acts and State GST Acts. Rule 120A was introduced on 15 September 2017 in CGST Rules with effect from 15 September 2017 providing for one-time revision of TRAN-1 Form within same time prescribed in Rule 117. Time was extended for revising and filing TRAN-1 Form to 31 October 2017. On 28 October 2017, this was further extended to 30 November 2011. On 10 November 2017 press release issued stating that time of filing/revising Form TRAN-1 had been extended till 31 December 2017, however on 15 November 2017, time limit was extended only to 27 December 2017. On 3 April 2018 by circular was issued by CBEC on directions of GST Council IT Grievance Redressal Mechanism was enacted. On 10 September 2018 Rule 117(1A) inserted into CGST Rules providing extension of time for filing TRAN-1 Form for persons who faced technical difficulties in filing TRAN-1 Form. Further, under Rule 117(1A) time for filing TRAN-1 Form was extended till 31 January 2019 for persons facing technical difficulties. With further extensions now it is extended to 31 March 2020 for persons specified in Rule 117(1A). 6 WP 6998.2018 final.doc 6. Reverting to facts of this case. Petitioner had accumulated CENVAT Credit during its activities and payment of taxes. According to Petitioner, Petitioner attempted to file TRAN-1 Form on 27 December 2017. However, it could not file same, as according to Petitioner, there were problems on common portal run of Respondent No.6. It is Petitioner s case that Petitioner sent e-mail to official complaint portal of Respondents for GST related issues, and Petitioner received no response. Further, it is case of Petitioner that when Petitioner tried again to file TRAN-1 Form on 28 December 2017, it did not permit option for filing of TRAN-1 Form. Another e- mail was sent by Petitioner on 12 January 2018 to resolve technical difficulties but Petitioner which received no response. It is case of Petitioner that Deputy Commissioner (Anti- Evasion) and Superintendent (Anti-Evasion) of Central Goods and Services Tax Authority visited Petitioner s premises on 28 March 2018 regarding GSTR-3B; however, they did not remedy grievance of Petitioner regarding TRAN-1 Form. 7. According to Petitioner, Petitioner is entitled to avail CENVAT Credit, details of which are given in Petition, under Section 140 of Central Goods and Services Tax Act and Maharashtra Goods and Services Sales Tax Act. It is grievance of Petitioner that last communication made by 7 WP 6998.2018 final.doc Petitioner on 23 April 2018 requesting Respondents to permit filing TRAN-1 Form has not been answered and there is no option of manually filing TRAN-1 Form, and Petitioner is in danger of losing CENVAT Credit accrued, Petitioner is constrained to file this Petition. 8. Petitioner has challenged Rule 117 of Central Goods and Services Tax Rules, 2017 as ultra-vires Sections 140(1), 140(2), 140(3) and 140(5) of Central Goods and Services Act, 2017 to extent that it prescribes time limit for filing of TRAN-1 Form. Consequently, validity of CBEC s Orders dated 21 September 2017, 28 October 2017 and 15 November 2017 issued under Rule 117 of CGST are challenged. Petitioner has further sought for direction to Respondents to permit filing of TRAN-1 Form. 9. Respondents have filed reply affidavit and have supported impugned enactment, and have opposed relief sought for. As regards Petitioner s case of Petitioner making bonafide attempt to file GST TRAN-1, reply affidavit has been filed by Commissioner of Central Goods and Services Tax and Central Board of Excise and Customs. It is stated that Petitioner did not specify nature of technical difficulties, produced no proof of having been encountered technical difficulties and e-mail on 27 December 2017 was sent on 17.53 hours. Since no proof was 8 WP 6998.2018 final.doc produced that Petitioner made any bonafide attempt and encountered technical difficulties, Petitioner cannot be held to be person facing technical difficulties to give benefit of extended period. case of Petitioner was examined based on system log of portal, and it is clear that Petitioner had encountered no technical difficulties and no evidence of error was found on system log. 10. Petitioner has filed affidavit in rejoinder stating that Petitioner made various followup attempt by forwarding scanned copies of letter dated 23 April 2018 to jurisdictional officer and met officers to resolve issue. Petitioner has asserted in rejoinder that Petitioner encountered technical difficulties in submitting TRAN-1 Form on 27 December 2017 due to technical difficulties on GSTN common portal. Petitioner contends that once Respondents admit there is IT-related difficulty on common portal, then it cannot ask Petitioner to produce proof thereof. 11. Petitioner, by additional affidavit dated 13 March 2019 has sought to produce screenshot of browsing history from laptop of its officer to demonstrate that bonafide attempt was made to file TRAN-1 Form. It is also stated that history was extracted in March 2019, and extracted history may not contain 9 WP 6998.2018 final.doc full details. 12. We have heard Mr. V. Sridharan, learned Senior Advocate along with Mr. Prakash Shah and Mr. Sriram Sridharan, learned Advocates for Petitioner and Mr. Anil Singh, learned Additional Solicitor General along with Mr. Pradeep Jetly, learned Senior Advocate and Mr. J.B. Mishra, learned Advocate for Respondent Nos.1,2,4,6 and 7 and Ms. Shruti Vyas, learned Additional Government Pleader for Respondent No.3. 13. Various petitions have been filed in this Court challenging time limit stipulated. These Petitions are listed together and notified on board. challenge on ground of ultra-vires and violative of Article 14 of Constitution of India is common in all Petitions. During hearing of present Petition, we permitted Advocates in other Petitions to address on these legal issues and treated present Petition as lead Petition. Accordingly, Mr. Bharat Raichandani, Mr. Ishaan Patkar, Mr. Prithviraj Choudhari and Mr. Chandrakant Thakar, learned Advocates have addressed us. Mr. V.A. Sonpal, learned Advocate, has addressed us for Respondents in some of Petitions. 14. discussion can be divided under four heads - (i) challenge to impugned Rule on ground of it being ultra- vires of parent statute; (ii) challenge on ground of 10 WP 6998.2018 final.doc Rule being unreasonable and violative of Article 14 of Constitution on India; (iii) meaning of phrase technical difficulties under Rule 117(1A) and role of IT Redressal Cell and whether by creating categories discretion is being fettered; (iv) relief to Petitioner, if any. 15. First, we take ground of ultra-vires. Second, challenge based on Article 14 of Constitution of India. Third, aspect of technical difficulties under Rule 117(1A) and last, relief to present Petitioner. 16. In short, Petitioner s contentions on first aspect are: Rule 117 is ultra-vires of Section 140 and is not traceable to any provision of Act. phrase used in Section 140 as prescribed manner cannot mean rule-making power to prescribe period of limitation. This phrase is judicially construed. Supreme Court and various High Courts have construed phrase prescribed manner as not to include power to make rules imposing time limit. After judicial pronouncement, if legislature later has used same phrase, it has to be construed as it is judicially interpreted. There is intrinsic evidence in Act itself to show that whenever legislature wanted to confer rule-making power, specific phraseology is used. Therefore, whenever legislature wanted to confer rule-making power to prescribe time 11 WP 6998.2018 final.doc limit, it has been specifically so prescribed. It is uniform and settled legislative practice to use phrase prescribed manner when legislature does not intend to confer rule-making power to provide limitation. rule-making power to prescribe time limit cannot be traced to general rule-making power under Section 164. Merely because Rules have been placed before Parliament does not cure inherent lack of power. Section 140 prescribes self-declaration to be confirmed later during stipulated period and therefore, no prejudice to Respondents. Rule 117 so far as it prescribes time limit to submit TRAN-1 Form cannot be traced either to Section 140 nor to Section 164 nor any other provision of Act. Therefore, Rule 117, to extent it provides time limit, is ultra-vires of parent statute. input tax credit has always been core feature of goods and services tax all over world and denial of input tax credit when levy is imposed on output strikes at core. Under new GST law, every supply is taxable. GST is applicable on appointed date, despite contract entered into. Provisions are made for automatic transaction to GST to enable collection of GST for output, and there is no choice. Under scheme of Act, therefore input tax credit for earlier period has to be given. Filing of form is necessary only for procedural formalities, and therefore, filing of return is contemplated. However, Parliament has given right to Input Tax Credit for earlier period under Section 140(1), and 12 WP 6998.2018 final.doc this right cannot be taken away by rules. right to input tax credit existed under old regime and also same is continued under new regime. 17. reply of Respondents, in brief, is as follows. There is presumption to legality and validity of subordinate legislation, and burden is heavy on those who assert its invalidity. Even with subordinate legislation, Court should be slow in concluding invalidity. input tax credit, in transitionary provision under section 140, is nature of exemption and is not matter of right. Section 140 is transitional provision which by very nature is limited by time duration. provisions under Act could have easily taken away input credit accrued under earlier regime, but by way of concession, input credit is continued with conditions. As regards rule-making power, Section 164(2) is general rule-making power. Section 164(2) is couched in most extensive terms, and Rule 117 is traceable to this power. time limit under Rule 117 is not contrary to any provisions of Act, nor it takes away any substantive right. judicial pronouncements about rule-making power and time limit within earlier tax regime would not if so facto apply for interpreting transitionary provisions. Further, GST tax regime and transitionary provisions are unique. For determining challenge based on lack of rule-making power, scheme and 13 WP 6998.2018 final.doc Act have to be seen. Rules once placed before Parliament and approved cannot be debated upon for their validity. availment of Input Tax Credit is regulated by rules and must be availed within time period. 18. Rule 117 falls under chapter XIV of Goods and Services Tax Rules. Chapter XIV is titled Transitional Provisions. This chapter contains six Rules. Rule 117 deals with tax or duty credit carried forward on appointed date. Section 118 is regarding person to whom Section 142(11)(c) applies. Rule 119 is regarding declaration of stock. Rule 120 deals with details of goods sent on approval basis. Section 120A deals with revision of declaration of TRAN-1 Form. Section 121 is regarding recovery of credit wrongly availed. part of Rule 117 relevant for this discussion is reproduced below: Rule 117: Tax or Duty Credit Carried Forward under any Existing Law or on Goods Held in Stock on Appointed Day (Chapter-XIV: Transitional Provisions) (1) Every registered person entitled to take credit of input tax under section 140 shall, within ninety days of appointed day, submit declaration electronically in FORM GST TRAN-1, duly signed, on common portal specifying therein, separately, amount of input tax credit to which he is entitled under provisions of said section: 14 WP 6998.2018 final.doc Provided that Commissioner may, on recommendations of Council, extend period of ninety days by further period not exceeding ninety days. * * * (1A) * * * (2) * * * (3) * * * (4) * * * (emphasis supplied) Rule 117(1), thus, states that person entitled to take credit of input tax under Section 140 would file declaration electronically in form known as GST TRAN-1 within 90 days. period can be extended on recommendation of Council for further period not exceeding 90 days. 19. Before we deal with challenge to Rule 117, two positions must be borne in mind. First, there is presumption to legality of statute. This presumption also applies to subordinate instrument. Second, both Section 140 and 117 fall in that part of statute which deals with transitionary provision between two regimes of taxation. In this context validity of Rule 117 has to be examined. 20. challenge to time limit under Rule 117, so far as it mandates time limit, being ultra-vires, it has two parts. First is referring to Section 140(1) of Act and rule-making power 15 WP 6998.2018 final.doc then. Second is based on Section 164 of Act, and general rule-making power. Petitioner has advanced elaborate submission on how rule-making power to prescribe time limit Rule 117 does not originate from Section 140, since only phrase used in this regard is `in such manner as may be prescribed . Several decisions have been cited on proposition that this phrase cannot confer power to prescribe time limit. Respondents, however, have relied upon Section 164 of Act. Nevertheless, for completeness, we refer to contentions of Petitioner regarding Section 140 and phraseology used for rule-making power. 21. Chapter XX of Act deals with Transitionary Provisions. Section 139 is of migration of existing taxpayers, which states that from on and from appointed day, every person registered under existing laws and having valid Permanent Account Number, would be issued certificate of registration on provisional basis. Section 139 states that conditions of form and manner would be as prescribed. final certificate and conditions thereof would be as prescribed. Section 140 deals with transitional arrangement of input tax credit. Section 140 of CGST Act reads: 140. (1) registered person, other than person opting to pay tax under section 10, shall be entitled to take, in his electronic credit ledger, amount of CENVAT credit of eligible duties carried forward in 16 WP 6998.2018 final.doc return relating to period ending with day immediately preceding appointed day, furnished by him under existing law in such manner as may be prescribed: Provided that registered person shall not be allowed to take credit in following circumstances, namely: (i) where said amount of credit is not admissible as input tax credit under this Act; or (ii) where he has not furnished all returns required under existing law for period of six months immediately preceding appointed date; or (iii) where said amount of credit relates to goods manufactured and cleared under such exemption notifications as are notified by Government. (2) registered person, other than person opting to pay tax under section 10, shall be entitled to take, in his electronic credit ledger, credit of unavailed CENVAT credit in respect of capital goods, not carried forward in return, furnished under existing law by him, for period ending with day immediately preceding appointed day in such manner as may be prescribed: Provided that registered person shall not be allowed to take credit unless said credit was admissible as CENVAT credit under existing law and is also admissible as input tax credit under this Act. Explanation: For purposes of this sub-section, expression unavailed CENVAT credit means amount that remains after subtracting amount of CENVAT credit already availed in respect of capital goods by taxable person under existing law from aggregate amount of CENVAT credit to 17 WP 6998.2018 final.doc which said person was entitled in respect of said capital goods under existing law. (3) registered person, who was not liable to be registered under existing law, or who was engaged in manufacture of exempted goods or provision of exempted services, or who was providing works contract service and was availing of benefit of notification No. 26/2012-Service Tax, dated 20th June, 2012 or first stage dealer or second stage dealer or registered importer or depot of manufacturer, shall be entitled to take, in his electronic credit ledger, credit of eligible duties in respect of inputs held in stock and inputs contained in semi-finished or finished goods held in stock on appointed day subject to following conditions, namely: (i) such inputs or goods are used or intended to be used for making taxable supplies under this Act; (ii) said registered person is eligible for input tax credit on such inputs under this Act; (iii) said registered person is in possession of invoice or other prescribed documents evidencing payment of duty under existing law in respect of such inputs; (iv) such invoices or other prescribed documents were issued not earlier than twelve months immediately preceding appointed day; and (v) supplier of services is not eligible for any abatement under this Act: Provided that where registered person, other than manufacturer or supplier of services, is not in possession of invoice or any other documents evidencing payment of duty in respect of inputs, then, such registered person shall, subject to such 18 WP 6998.2018 final.doc conditions, limitations and safeguards as may be prescribed, including that said taxable person shall pass on benefit of such credit by way of reduced prices to recipient, be allowed to take credit at such rate and in such manner as may be prescribed. (4) registered person, who was engaged in manufacture of taxable as well as exempted goods under Central Excise Act, 1944 or provision of taxable as well as exempted services under Chapter V of Finance Act, 1994, but which are liable to tax under this Act, shall be entitled to take, in his electronic credit ledger, (a) amount of CENVAT credit carried forward in return furnished under existing law by him in accordance with provisions of sub-section (1); and (b) amount of CENVAT credit of eligible duties in respect of inputs held in stock and inputs contained in semi-finished or finished goods held in stock on appointed day, relating to such exempted goods or services, in accordance with provisions of sub- section (3). (5) registered person shall be entitled to take, in his electronic credit ledger, credit of eligible duties and taxes in respect of inputs or input services received on or after appointed day but duty or tax in respect of which has been paid by supplier under existing law, subject to condition that invoice or any other duty or tax paying document of same was recorded in books of account of such person within period of thirty days from appointed day: Provided that period of thirty days may, on sufficient cause being shown, be extended by Commissioner for further period not exceeding thirty days: 19 WP 6998.2018 final.doc Provided further that said registered person shall furnish statement, in such manner as may be prescribed, in respect of credit that has been taken under this sub-section. (6) registered person, who was either paying tax at fixed rate or paying fixed amount in lieu of tax payable under existing law shall be entitled to take, in his electronic credit ledger, credit of eligible duties in respect of inputs held in stock and inputs contained in semi-finished or finished goods held in stock on appointed day subject to following conditions, namely: 1(i) such inputs or goods are used or intended to be used for making taxable supplies under this Act; (ii) said registered person is not paying tax under section 10; (iii) said registered person is eligible for input tax credit on such inputs under this Act; (iv) said registered person is in possession of invoice or other prescribed documents evidencing payment of duty under existing law in respect of inputs; and (v) such invoices or other prescribed documents were issued not earlier than twelve months immediately preceding appointed day. (7) Notwithstanding anything to contrary contained in this Act, input tax credit on account of any services received prior to appointed day by Input Service Distributor shall be eligible for distribution as credit under this Act even if invoices relating to such services are received on or after appointed day. (8) Where registered person having centralised registration under existing law has obtained 20 WP 6998.2018 final.doc registration under this Act, such person shall be allowed to take, in his electronic credit ledger, credit of amount of CENVAT credit carried forward in return, furnished under existing law by him, in respect of period ending with day immediately preceding appointed day in such manner as may be prescribed: Provided that if registered person furnishes his return for period ending with day immediately preceding appointed day within three months of appointed day, such credit shall be allowed subject to condition that said return is either original return or revised return where credit has been reduced from that claimed earlier: Provided further that registered person shall not be allowed to take credit unless said amount is admissible as input tax credit under this Act: Provided also that such credit may be transferred to any of registered persons having same Permanent Account Number for which centralised registration was obtained under existing law. (9) Where any CENVAT credit availed for input services provided under existing law has been reversed due to non-payment of consideration within period of three months, such credit can be reclaimed subject to condition that registered person has made payment of consideration for that supply of services within period of three months from appointed day. (10) amount of credit under sub-sections (1), (3), (4) and (6) shall be calculated in such manner as may be prescribed. Explanation 1: For purposes of sub-sections (3), (4) and (6), expression eligible duties means 21 WP 6998.2018 final.doc (i) additional duty of excise leviable under section 3 of Additional Duties of Excise (Goods of Special Importance) Act, 1957; (ii) additional duty leviable under sub-section (1) of section 3 of Customs Tariff Act, 1975; (iii) additional duty leviable under sub-section (5) of section 3 of Customs Tariff Act, 1975; (iv) omitted (v) duty of excise specified in First Schedule to Central Excise Tariff Act, 1985; (vi) duty of excise specified in Second Schedule to Central Excise Tariff Act, 1985; and (vii) National Calamity Contingent Duty leviable under section 136 of Finance Act, 2001, in respect of inputs held in stock and inputs contained in semi-finished or finished goods held in stock on appointed day. Explanation 2: For purposes of Sub-sections (1) and (5), expression eligible duties and taxes means (i) additional duty of excise leviable under section 3 of Additional Duties of Excise (Goods of Special Importance) Act, 1957; (ii) additional duty leviable under sub-section (1) of section 3 of Customs Tariff Act, 1975; (iii) additional duty leviable under sub-section (5) of section 3 of Customs Tariff Act, 1975; (iv) omitted (v) duty of excise specified in First Schedule to Central Excise Tariff Act, 1985; (vi) duty of excise specified in Second Schedule to Central Excise Tariff Act, 1985; 22 WP 6998.2018 final.doc (vii) National Calamity Contingent Duty leviable under section 136 of Finance Act, 2001; and (viii) service tax leviable under section 66B of Finance Act, 1994, in respect of inputs and input services received on or after appointed day. Explanation 3: For removal of doubts, it is hereby clarified that expression eligible duties and taxes excludes any cess which has not been specified in Explanation 1 or Explanation 2 and any cess which is collected as additional duty of customs under sub- section (1) of section 3 of Customs Tariff Act, 1975. Subsections 1, 2, 3 and 5 lay down terms and conditions for transfer of credit from CENVAT Credit to Input Tax Credit. Section 140(1) deals with return to be filed for transfer of credit under pre- GST regime. Section 140(2) deals with transferring credit regarding Capital Goods. Credit of eligible duties on inputs or finished goods or semi-finished goods held in stock on appointed day and transition is dealt with under Section 140(3) of Act. Section 140(5) refers to transferring credit regarding inputs or input services in transit on appointed day. Section 140 deals with transitional arrangement of input tax credit, and for present topic, Section 140(1) 1 is material. 22. According to Petitioner, section 140(1) confers right on registered person to take CENVAT Credit of eligible duties 23 WP 6998.2018 final.doc in its electronic trading ledger to be carried forward and said right can be regulated only in such manner as may be prescribed, and thus, regulated by framing Rules. phrase as may be prescribed has been judicially construed as not to include within its ambit prescription of limitation. On this proposition, reliance is placed on decision of Supreme Court in case of Sales Tax Officer Ponkunnam and Anr. v/s. K.I. Abraham1, Bharat Barrel and Drum Mfg. Co. Ltd. v. Employees State Insurance Corporation 2 CIT, Patiala v. Shri Krishen Chand Charitable Trust3, Second ITO v. M.C.T. Trust4, CIT v. Trustees of Shri Techchand Chandiram Trust5 and decision of Division Bench of Madras High Court in M/s. Solar Works v/s. Employees State Insurance Corporation 6. perusal of these decisions does indicate that phrase prescribed manner has been construed not to include within its ambit rule- making power to prescribe time limit. Different phrases have been employed in Act such as Section 37 uses phrase "within such time , Section 38 uses phrase within such time as may be prescribed, Sections 25,28, 29, 30, 32, 37,38, 40, 43, 49, 50, 52, 53, 53A, 84, 141 also use different phrases regarding time limit. 23. However, as stated earlier, primary reliance of Respondents is on Section 164, that is general rule-making 1 (1967) 3 SCR 518 2 (1971) 2 SCC 860 3 (1975) 98 ITR 387 (J & K) 4 (1976) 102 ITR 138 (Madras) 5 (1990) 184 ITR 537 (Bom) 6 AIR 1964 MAD 376 24 WP 6998.2018 final.doc power. Section 164 empowers Government to makes rules on recommendations of Council for carrying out provisions of Act. Without prejudice to generality of provisions, it also confers powers on Government to make rules for all or any of matters which by this Act are required to be, or may be, prescribed or in respect of which provisions are to be or may be made by rules. 24. Division Bench of Gujarat High Court in case of Willowood Chemicals Ltd. v/s. Union of India 7 has negatived contention of Rule 117(1) being ultra-vires referring to Section 164 of Act. criticism of Petitioner on this approach of Gujarat High Court is that though Court noticed decision of Supreme Court in case of K.I. Abraham, it failed to notice that in Supreme Court has held that imposition of time limit could not be referred to general rule-making power. 25. In case of K.I. Abraham, Supreme Court was considering Central Sales Tax Act. Reliance is placed on observations of Supreme Court in following passage:- 4. It was contended on behalf of appellants that assessee had not filed declarations in form "C" before February 16, 1961 according to third proviso to Rule 6(1) and in view of breach of this Rule assessee was not entitled to take advantage of lower 7 (2014) 306 ELT 551 25 WP 6998.2018 final.doc rate of assessment under s. 8(1) of Act. opposite view-point was put forward on behalf of assessee and it was argued that third proviso to Rule 6(1) was ultra vires of s. 8(4) read with s. 13(4)(e) of Act. decision of question at issue therefore depends on construction of phrase "in prescribed manner" in s. 8(4) read with s. 13 of Act. In our opinion, phrase "in prescribed manner" occurring in s. 8(4) of Act only confers power on rule-making authority to prescribe rule stating what particulars are to be mentioned in prescribed form, nature and value of goods sold, parties to whom they are sold, and to which authority form is to be furnished. But phrase "in prescribed manner" in s. 8(4) does not take in time-element. In other words, section does not authorities rule-making authority to prescribe time-limit within which declaration is to be filed by registered dear. view that we have taken is supported by language of s. 13(4)(g) of Act which states that State Government may make rules for "the time within which, manner in which and authorities to whom any change in ownership of any business or in name, place or nature of any business carried on by any dealer shall be furnished." This makes it clear that Legislature was conscious of fact that expression "in manner" would denote only ode in which act was to be done, and if any time-limit was to be prescribed for doing of act, specific words such as "the time within which" were also necessary to be put in statute. In Stroud's Judicial Dictionary it is said that words "manner and form" refer only "to mode in which thing is to be done, and do not introduce anything from Act referred to as to thing which is to be done or time for doing it. "In Acraman v. Herniman 117 E.R. 1164 plaintiffs had become assignees in 26 WP 6998.2018 final.doc bankruptcy proceedings against Garret who had executed on March 4, 1850 warrant of attorney to defendant Herniman on strength of which latter had obtained judgment against him and sold his goods. copy of warrant of attorney was filed with officer acting as clerk of documents and judgments in court of Queen's Bench on March 11, 1850, but no affidavit of time of execution of such warrant of attorney was filed at any time. Stat. 12 and 13 Vict. C. 106, s. 136 provided that any warrant of attorney given by trader to confess judgment in personal action, not filed within twenty-one days after execution in manner and form provided by State. 3. G-4, C. 39 should be deemed fraudulent, null and void Section 1 of Stat. 3 G. 4, C. 39 required that such warrant of attorney should be filed together with affidavit of time of execution thereof, within twenty-one days of execution of warrant of attorney. Section 2 provided that if after twenty-one days, party giving such warrant of attorney shall be declared bankrupt, then unless warrant or copy thereof shall have been filed as aforesaid within 21 days from execution or unless judgment shall have been signed or execution issued thereon within same period, such warrant of attorney and judgment and execution thereon, shall be deemed fraudulent and void against assignees, As already stated, judgment had been signed on March 11, 1850, i.e., within twenty-one days of execution of warrant of attorney, and it was contended on behalf of defendant that judgment was valid notwithstanding failure to file affidavit as required by section 1 of Stat. 3 G. 4 C. 39. arguments was rejected and it was held by Queen's Bench that warrant of attorney and judgment thereon were void as against assignees in bankruptcy. In course of his judgment, Lord Campbell C.J. 27 WP 6998.2018 final.doc observed as follows : "The enactment of stat. 12 & 13 Vict. C. 106, s. 136, is very plain; and I cannot agree to put forced construction upon it. Legislature has said there that any warrant of attorney given by trader to confess judgment in personal action, not filed within twenty-one days after execution in manner and form provided by star. 3. G 4. C. 39, shall be deemed fraudulent, null and void. manner directed by that Act is filing warrant or copy, with affidavit of time of execution. Here are judgment and execution on warrant of attorney given by trader, and warrant filed, but without affidavit. plain meaning of late Act is that such warrant shall be null and void against assignees. words 'in manner and form, 'refer only to mode in which thing is to be done, and do not introduce anything from Act referred to, as to thing which is to be done or time for doing it." 5. view that we have expressed as to interpretation of s. 8(4) of Act is also supported by 'Note' to form of declaration - Form C - prescribed by Rule 12 of Central Sales Tax (Registration & Turnover) Rules, 1957. Note states that form is to be furnished to prescribed authority in accordance with rules framed under section 13(4)(c) by appropriate State Government. For reasons expressed, we hold that third proviso to Rule 6(1) is ultra vires of s. 8(4) read with s. 13(3) and (4) of act. It follows therefore that assessee was not bound to furnish declarations in Form 'C' before February 16, 1961 in present case. In absence of any such 28 WP 6998.2018 final.doc time-limit it was duty of assessee to furnish declarations in form C within reasonable time, and in present case it is admitted position that assessee did furnish declaration on March 8, 1961 before order of assessment was made by Sales Tax Officer. We are accordingly of opinion that assessee tax furnished declarations in Form C in percent case within reasonable time and there has been compliance with requirements of s. 8(4)(a) of act. It follows that High Court was right in quashing order of assessment made by Sales Tax Officer and directing him to make fresh order of assessment taking into consideration declaration forms furnished by assessee on March 8, 1961. Thus, Supreme Court considered phrase prescribed manner in Section 8(4) of Central State Tax Act, and Section 13(4)(g) to declare invalidity. As our further analysis will show that provisions under consideration of Supreme Court and context of legislation were completely different than one at hand. 26. It is necessary to examine scheme of Act, terminology employed conferring general rule-making power and nature of Legislation to adjudicate charge of lack of rule- making power. When court is called upon to decide challenge to validity of subordinate legislation, it will have to consider nature, object, and scheme of Act, and area over which power has been delegated under Act. 29 WP 6998.2018 final.doc 27. Respondents have stressed upon distinctiveness of Act and constitutional amendments governing it. With GST, large number of Central and State taxes were subsumed in single tax. Constitution of India provides for segregation of fiscal powers between Centre and States essentially with no overlap. However, by 100th Constitution Amendment Act, 2016, for first time, both Centre and States concurrently have power to levy and collect GST. mechanism for joint operation of GST is evolved. Union levies CGST and States levy SGST. Parliament has exclusive power to levy IGST on interstate trade or commerce. Goods and Service Tax Council has been established. For dealing with IT system, Goods and Services Tax Network (GSTN) has been set up. point to stress here is that with Goods and Services Tax, indirect taxation regime in India has undergone complete overhaul and it has brought about unique amalgam of fiscal powers. 28. Another unique feature is chapter XX of Act, which incorporates Section 140. Petitioner bases it s right to section 140. heading of Chapter XX is 'Transitional provisions'. heading of S.140 is 'Transitional Arrangements for Input Tax Credit'. words used provide clue to nature of this provision. word 'arrangement' means action, process, plan. 'Transition' means process or period changing from one state or 30 WP 6998.2018 final.doc condition to another8. Thus, plain language understanding of these two phrases, juxtaposed, is process of regulating change from one position to another. Under this Chapter, legislature has devised arrangement during transitional period from earlier tax system to GST regime. This transitionary provision is unique legislative provision and merits different approach by Courts. 29. amplitude of rulemaking power is regulated by and is conditional upon phraseology of provision of Act conferring it. If provision granting rulemaking power is couched in widest terms, then doctrine of ultra vires cannot be casually applied. 30. Thus now to examine phraseology used in Section 164 of Act. Section 164 reads thus: S. 164 Power of Government to Make Rules (1) Government may, on recommendations of Council, by notification, make rules for carrying out provisions of this Act. (2) Without prejudice to generality of provisions of sub-section (1), Government may make rules for all or any of matters which by this Act are required to be, or may be, prescribed or in respect of which provisions are to be or may be made by rules. 8 Concise Oxford English Dictionary 11th Edition, Oxford University Press. 31 WP 6998.2018 final.doc (3) power to make rules conferred by this section shall include power to give retrospective effect to rules or any of them from date not earlier than date on which provisions of this Act come into force. (4) Any rules made under sub-section (1) or sub-section (2) may provide that contravention thereof shall be liable to penalty not exceeding ten thousand rupees. 31. Section 164 (1) empowers government, on recommendation of GST Council, to make rules for carrying out provisions of Act. Sub-section (3) declares that power to make rule under this section also include power to give retrospective effect. power to levy penalty in contravention is declared in sub-section (4). Sub-section (2) is in most extensive terms. Government can make rules for all or any of matters which by this Act are required to be, or may be prescribed or in respect of which provisions are to be or may be made by rules. It is clear from reading Section 164(2), that Government has power to make rules not only for matters already prescribed but those may be prescribed in future or in respect of which provisions are to be made by rules. Thus, section 164 governs most comprehensive range of rule-making power. 32. reason behind granting extensive range of rule- making power under this Act is not difficult to comprehend. It is 32 WP 6998.2018 final.doc because of nature of legislation in question. GST has overhauled existing multiple tax regimes into single tax. This first of its kind in country. Since system and principles under it are new, quick adaption to peculiar situations that may arise is crucial. It is necessary that system is dynamic to keep pace with technological and commercial developments. It should be flexible to meet emerging challenges to revenue needs on ongoing basis. It is for this flexibility that legislature has conferred extensive rule-making power. 33. reason for alluding to legislative backdrop and language of section 164 is because each disputes relating to limitation of rule-making power will have to be resolved with reference to language of each provision. doctrine of ultra vires should not be uniformly applied without examining terminology of concerned statute. 34. Turning now to decisions cited by Petitioner. rule-making power which arose for consideration of Supreme Court in Central Sales Tax Act in case of A.K. Abraham was Section 8(4) and Section 13. Petitioner has drawn comparison to Section 13(3) of Central Sales Tax Act with Section 164 of CGST Act. Relevant provisions are reproduced by in para 3 of judgment, as under : 33 WP 6998.2018 final.doc 3. Section 8 of Act, it stood on material date, was to following effect : "8. (1) Every dealer, who in course of inter-State trade or commerce - (a) sells to Government any goods; or (b) sells to registered dealer other than Government goods of description referred to in sub- section (3); Shall be liable to pay tax under this Act, which shall be one per cent, of his turnover. (2) tax payable by any dealer on his turnover in so far as turnover or any part thereof relates to sale of gods in course of inter-State trade or commerce not falling within sub-section (1) - (a) in case of declared goods, shall be calculated at rate applicable to sale or purchase of such goods inside appropriate State; and (b) in case of goods other than declared goods, shall be calculated at rate of seven per cent, or at rate applicable to sale or purchase of such goods inside appropriate State, which-ever is higher : and for purpose of making any such calculation any such dealer shall be deemed to be dealer liable to pay tax under sales tax law of appropriate State, notwithstanding that the, in fact, may not be so liable under that law. * * * (4) provisions of sub-suction (1) shall not apply to any sale in course of inter-State trade or cannoneers unless dealer selling goods furnished to prescribed authority in prescribed manner - (a) declaration duly filled and signed by registered dealer to whom goods are sold containing prescribed particulars in prescribed form obtained from prescribed authority; or 34 WP 6998.2018 final.doc (b) if goods are sold to Government, not being registered dealer, certificate in prescribed form duly filled and signed by duly authorised officer of Government." Section 13 states : "(1) Central Government may, by notification in Official Gazette, make rules providing for - (a) manner in which applications for registration may be made under this Act, particulars to be contained therein procedure for grant of such registration, circumstance in which registration may be refused and form in which certificate of registration may be given : (b) period of turnover, manner in which turnover in relation to sale of any goods under this Act shall be determined, and deductions which may be made in process of such determination : (c) cases and circumstances in which and conditions subject to which any registration granted under this Act may be cancelled; (d) form in which and particulars to be contained in any declaration or certificate to be given under this Act; * * * (3) State Government may make rules, not inconsistent with provisions of this Act and rules made under sub-section (1) to carry out purpose of this Act. (4) In particular and without prejudice to powers conferred by sub-section (3), State Government may make rules for all or any of following purpose, namely;- * * * (e) authority from whom, conditions subject 35 WP 6998.2018 final.doc to which and fees subject to payment of which any form declaration prescribed under sub-section (4) of section 8 may be obtained, manner in which form shall be kept in custody and records relating thereto maintained, manner in which any such form may be used any such declaration may be furnished; (f) in case of undivided Hindu family, association, club, society, firm or company or in case of person who carries on business as guardian or trustee or otherwise on behalf of another person, furnishing of declaration stating name of person who shall be deemed to be manager in relation to business of dealer in State and form which such declaration may be given. (g) time within which manner in which and authorities to whom any change in ownership of any business or in name, place or nature of any business carried on by any dealer shall be furnished ." Section 13(1) of Central Sales Tax Act empowered government to make rules for manner of applying for registration, period of turnover, cancellation of registration, form and particulars and fees for form of declaration, declaration in certain classes of persons, and general rule-making power of making rules 'not in consistent with provisions of act and rules' to carry out purpose of act. bare perusal of this provision shows it deals with specific contingencies and granted limited rule making power. In none of decisions cited before us by Petitioner, including that of K.I. Abraham, wide ambit of rule- 36 WP 6998.2018 final.doc making power as in Section 164 and that too to deal with transitional provisions of two tax regimes, has been considered. Therefore, decisions cited cannot be straightway made applicable without reference to language of section 164 to hold that Rule 117 is ultra vires. 35. situation regarding input tax credit within GST regime, is also relevant to note. It is governed by Section 16(4) of Act. Section 16(4) reads thus : Section 16(4) :- registered person shall not be entitled to take input tax credit in respect of any invoice or debit note for supply of goods or services or both after due date of furnishing of return under Section 39 for month of September following end of financial year to which such invoice or invoice relating to such debit note pertains or furnishing of relevant annual return, whichever is earlier. Section 16(4) provides that registered person shall not be entitled to take input tax credit regarding any invoice or debit note for supply of goods or services after due date of furnishing of return under section 39 for month of September following end of financial year to which such invoice or invoice relating to such debit note pertains or furnishing of relevant annual return, whichever is earlier. Section 16. Thus under GST regime, also Input Tax Credit is not without time limit. Prescribing time limit 37 WP 6998.2018 final.doc under impugned Rule is not contrary to object of Act. 36. respondents have, thus, rightly relied on Section 164. powers conferred by Section 164(2) are broad and pervasive and take within its sweep impugned Rule. 37. second limb of petitioner's argument is that assuming there is general rule-making power under Section 164(2), it cannot be exercised to take away substantive rights. This submission is founded on proposition that CENVAT credit is right; same cannot be taken away. Petitioner contends that right to input credit may not be common law right, but statute confers it under Section 140, and same, thus, cannot be abridged by executive through rule-making power. Relying on decision of Supreme Court in case of Bharat Barrel, it is contended that where substantive rights are affected, power of prescribing limitation is kept by Legislation to itself. Thus, substantive rights can be done away only by Parliament and not by its subordinates. Respondents contend that input tax credit, which is in nature of exemption, is not matter of right. Respondents rely on decisions of this Court. Counsel for parties have cited various decisions on this point; however, it is not necessary to refer to all as it is reiteration of same basic principle. We have, therefore restricted our discussion of case- 38 WP 6998.2018 final.doc laws cited on those which are closer to controversy at hand. According to us, two decisions referred below are most relevant, having construed very same provision and same arguments. 38. question of input credit tax being right or otherwise has in context of Section 140 has been directly considered by this Court in case of JCB India Ltd. and by Gujarat High Court in case of Willowood. Division Bench of this Court in case of JSW Dharmatar Port Pvt. Ltd. v/s. Union of India9, in context of refund for limitation has followed decision in Willowood. 39. First, decision of Gujarat High Court in Willowood. Here Court was considering challenge to constitutionality of Section 140(1) of Gujarat Goods and Services Tax Act. vires of Rule 117 of Central and Gujarat Goods and Services Tax Rules was also challenged. Prayers were sought to permit carry forward of CENVAT credit. Gujarat High Court took review of case law on subject. It referred to Rule 164 of Act. It observed thus: 25. Section 140 of Act envisages certain benefits to be carried forward during regime change. As is well-settled, reduced rate of duty or concession in payment of duty are in nature of exemption and is 9 2019(20) GSTL 721 (Bom.) 39 WP 6998.2018 final.doc always open for Legislature to grant as well as to withdraw such exemption. As noted in case of Jayam & Co. [2016] 96 VST 1 (SC) : [2016] 15 SCC 125, Supreme Court had observed that input-tax credit is form of concession provided by Legislature and can be made available subject to conditions. Likewise, in case of Reliance Industries Limited [2018] 50 GSTR 14 (SC) : [2017] 16 SCC 28, it was held and observed that how much tax credit has to be given and under what circumstances is domain of Legislature. In case of Godrej & Boyce Mfg. Co. Pvt. Ltd. [1992] 87 STC 186 (SC) : [1992] 3 SCC 624, Supreme Court had upheld rule which restricts availment of Modvat credit to six months from date of issuance of documents specified in proviso. contention that such amendment would take away existing right was rejected. (Emphasis supplied) Gujarat High Court held that Input Tax Credit under Section 140 was matter of concession. contention of Petitioner that Gujarat High Court in Willowood has mixed up various concepts is neither warranted nor justified. arguments were advanced regarding reasonableness of restriction and rulemaking power and that input credit being right or otherwise, and they were considered together. Court kept in mind distinction between concepts. Merely because various heads of challenges have been dealt with together, it does not mean they have been mixed up. 40 WP 6998.2018 final.doc 40. Division Bench of this Court in JCB India Ltd. considered provisions of Section 140 of Act . Here petitioner manufactured certain heavy machinery had in certain stock machines as of 30 June 2016, and according to it, it did not have to pay excise duty again after onset of GST regime. In this context, challenge was made to provision. Petitioner had contended that Input Tax Credit being integral part of GST law; it is right, and it is not concession by Government. Respondent State contended claim of Petitioner that credit being right. contention of State is reproduced in para 30, which is same advanced before us, is as under:- 30. Our attention has been invited by Mr. Anil Singh to settled principle that insofar as economic legislation is concerned, grounds on which its constitutionality can be challenged are extremely limited. In sense, if that legislation incorporates policy measure, then wisdom thereof cannot be questioned by this Court. Mr. Anil Singh would submit that this matter is of concession or relaxation. Nobody can claim vested right in such measures evolved by Legislature. It is entirely for Legislature to make provision and restrict benefit or concession or relaxation either to class of persons or even if it extends to all, it can restrict term or period or limit up to which concession can be availed of. In instant case, period of twelve months is provided as safeguard against potential misuse of availment of credit during transition period by placing restriction on availing credit based on documents which are not very old. There is no concept as equality in Tax matters. Apart therefrom, 41 WP 6998.2018 final.doc similar restrictions had been in place on manufacturers/service providers under Firth proviso to sub-rule (7) of Rule 4 of erstwhile CENVAT Credit Rules, 2004. It is also argued by Mr. Anil Singh that when in Value Added Tax there was restriction on availing of credit in law, now, there is substantive provision in new law. However, it is only transitional provision which inserts or incorporates above condition, as Legislature deemed it fit and proper to enforce new regime from 1-7-2017. When new regime replaces bundle of legislations seeking to tax activity of manufacturers, sales and extension of service, then, it was deemed fit and proper that transition to new regime, from old one, should be smooth. For it to be smooth and proper, restriction has been placed on availment of CENVAT credit during transitional period and by making above statutory prescription. Mr. Anil Singh would submit that it is entirely for Legislature to make such provision and its power in that behalf is not questioned. If there is no challenge to impugned condition on ground of competence of Legislature, then, competent Legislature could have made restrictive provision and which is precisely intent. transition from old regime to new one should be smooth and expedient. Hence, reasonable period of twelve months has been provided. Why it is only twelve months and why it does not date back to stage, petitioners in these petitions would deem it fit and proper, is not test which can be evolved and applied for considering constitutionality of legislation. Ultimately, it is Legislature which is best Judge and in its wisdom, insofar as fiscal policies are concerned, it has imposed this condition. That is, therefore, reasonable and as explained in affidavit in reply. On all counts, therefore, challenge is devoid of merits according to 42 WP 6998.2018 final.doc Mr. Anil Singh and it deserves to be repelled. (emphasis supplied) Therefore, issue as to input credit contemplated under transitional provision being concession or right was squarely put forth for consideration. Division Bench analyzed decisions on subject of Supreme Court in Jayram and Company v/s. Assistant Commissioner & Anr.10, Eicher Motors Ltd. v/s. Union of India11, Osram Surya (P) Ltd. v/s. Commissioner of Central Excise, Indore12, Samtel India Ltd. v/s. Commissioner of Central Excise, Jaipur13and concluded by observing thus:- 56. To our mind, therefore, learned Additional Solicitor General is right in his contention that CENVAT credit is mere concession and it cannot be claimed as matter of right. If CENVAT Credit Rules under existing legislation themselves stipulate and provide for conditions for availment of that credit, then, that credit on inputs under existing law itself is not absolute but restricted or conditional right. It is subject to fulfilment or satisfaction of certain requirements and conditions that right can be availed of. It is in these circumstances that we are unable to agree with Counsel appearing for petitioners that impugned condition defeats any accrued or vested right. It was never vesting in them in such absolute terms, as is argued before us. If existing law itself imposes condition for its enjoyment or availment, then, it is not possible to agree with Counsel that 10 2016(15) SCC 125 11 1999(106) ELT 3 SC 12 2002(142) ELT 5 SC 13 2003(155) ELT 14 SC 43 WP 6998.2018 final.doc such rights under existing law could have been enjoyed and availed of irrespective of period or time provided therein. period or outer limit is prescribed in existing law and Rules of CENVAT credit enacted thereunder. In circumstances, it is not possible to agree with Counsel appearing for petitioners that imposition of condition vide Clause (iv) is arbitrary, unreasonable and violative of Articles 14 and 19(1)(g) of Constitution of India. 57. We would refer to Judgments which are heavily relied upon in this context. It is stated that rights and privileges accrued during existing law have been specifically saved under Section 174 of CGST Act, 2017. If what are saved are rights and privileges of nature noted above, then it cannot be said de hors conditions or de hors restriction on availment or enjoyment of that right they have been saved by CGST Act. In other words, if rights are conferred with conditions under existing law, then, they are saved by CGST Act with such conditions and not otherwise. There must be clear provision to grant it otherwise than in terms of existing Law or in other words, restrictions or conditions on availment of that right are removed totally. No such provision has been brought to our notice. It is clear that if right to availment of CENVAT credit itself is conditional and not restricted or absolute, then, right to pass on that credit cannot be claimed in absolute terms. It is argued that it is vested right accruing to petitioner. 58. In case of Elcher Motors (supra), what was in issue before Supreme Court must be noted. In Elcher Motors, Three Judge Bench of Supreme Court of India was concerned with validity and 44 WP 6998.2018 final.doc application of scheme, as modified by introduction to Rule 57F {read as 57F(4A)} of Central Excise Rules, 1944, under which credit which was lying unutilised on 163 995 with manufacturers, stood lapsed in manner set out in provision. That was questioned. 60. In para 5 of this Judgment, introduction was traced and it was held that if on inputs assessee had already paid taxes on basis that when goods are utilised in manufacture of further products as inputs thereto, then, tax on these goods gets adjusted which are finished subsequently. Thus, right accrued to assessee on date when they paid tax on raw materials or inputs and that right would continue until facility available thereto gets worked out or until those goods existed. Thus, this is case where Rule, as introduced, provided for total lapsing of that credit which was lying unutilised with manufacturer on 1631995. That was held to be impermissible within scheme of law. We are not considering here such situation. 61. We are not confronted with situation of lapsing of credit though petitioners may equate position before us with that of Elcher Motors. We are dealing with validity and legality of condition imposed in transitional arrangement. While moving from one legislation to another comprehensive legislation, in latter legislation Legislature deemed it fit and proper to continue earlier or erstwhile arrangement by terming it as transition or transitional one. That continuation was with conditions and one of conditions which is questioned here is consistent with conditions imposed under existing law. Such situation was not dealt with in 45 WP 6998.2018 final.doc Elcher Motors. Thus, decision is clearly distinguishable. 62. Reliance is then placed on another decision in case of Jayam & Company (supra). Once again we must see what was dealt with in Jayam & Company. argument before Hon'ble Supreme Court in Jayam & Company was whether subsection (20) of Section 19 of Tamil Nadu Value Added Tax Act, 2006 could be given retrospective effect. appellants were dealers and registered as such under provisions of above VAT Act. They argued that they had dealt in electronic home appliances. They purchased them from local registered dealers on payment of VAT under VAT invoice issued by vendors. Thereafter, there was resale to consumers under VAT invoice charging appropriate VAT on their selling price. On resale, VAT is paid by dealer. dealer is entitled to avail input VAT credit and he is entitled to credit on VAT which was paid to vendors on purchase of TV sets from vendors. What had happened was, after original tax invoice and availing input tax credit, vendor gave discount and purchase credit note was issued for lesser price. dealer took into account price which it had paid to vendor after adjusting discount that was subsequently given to dealer to arrive at net cost and adding VAT which was limited to vendors by dealers. goods were resold at lesser price. After introduction of subsection (20) in Section 19 and once again, which has nonobstante clause, obligation was to reverse input tax credit. In other words, if registered dealer sold goods at price lesser than price of goods purchased by him, he had to reverse amount of input tax credit over and above output tax of those goods. It was such issue which was considered and in considering 46 WP 6998.2018 final.doc that definitions and substantive provisions of Tamil Nadu Value Added Tax Act, 2006 were referred. Supreme Court noted that input tax credit is form of concession provided by Legislature. It is not permissible to all kinds of sales and certain specified sales are specifically excluded. concession of input tax credit is available on certain conditions mentioned in this section, namely, Section 19 and one of most important condition was that, in order to enable dealer to claim that credit it has to produce original tax invoice, complete in all respect, evidencing amount of input tax. It is in these circumstances that Hon'ble Supreme Court held that challenge to constitutional validity had to fail. It clearly held that when there was concession given by statute, Legislature has to make provision stating form and manner in which concession is to be allowed and subsection (20) seeks to achieve that. There was no right, inherent or otherwise, vested with dealers to claim benefit of input tax credit but for Section 19 of VAT Act. We, therefore, do not see how de hors this position reliance can be placed only on some paras of this Judgment. We cannot ignore what was essentially decided. This is not matter of retrospective operation of fiscal statute, as was projected before us in passing. This is clear case as operating within ambit of Jayam & Company itself. As is before us, concession is being provided by Legislature which but for provision granting such concession could have not been availed. availment of CENVAT credit or input tax credit is clearly termed as concession. With conditions imposed, concession could have been availed of. In absence of substantive provision granting such concession, there would have been no concession at all. Thus, one cannot pick and choose condition for challenge by alleging 47 WP 6998.2018 final.doc that availment is undisputedly conditional but one of conditions, though having nexus with availment, is unconstitutional or arbitrary and excessive. nature of that condition, its placement consistent with scheme is then conveniently ignored. We cannot allow this argument to be built on basis of reliance on para 18 of Judgment in Jayam (supra). (emphasis supplied) ratio laid down by Division Bench in JCB India Ltd. interpreting Transitional Provisions and distinguishing other decisions, is unequivocal. 41. Petitioner has sought to distinguish decisions in Willowood and JCB India Ltd. contending that Division Bench was not considering Section 140(1) and right under different subsections of section 140 are different and operate in different fields and what is relevant for one class cannot be made applicable to another class. It is submitted that decisions in JCB India Ltd. and Willowood have considered section 140(3) of Act. We do not think these decisions can be distinguished in this manner. decisions in JCB India Ltd. and Willowood have laid down general principle of law. question of credit in transitional provision being concession or right was argued and has been considered. We have not been shown any decision of this Court to contrary. As matter of judicial discipline, we will have to follow dicta laid 48 WP 6998.2018 final.doc down by Division Bench of this Court in JCB India Ltd. 42. decision of Supreme Court in case of Collector of Central Excise, Pune v. Dai Ichi Karkaria Ltd. 14 cited by Petitioner refers to MODVAT credit and in deciding co- relation of raw material and final product. Apex Court held that it is not as if credit can be taken only on final product manufactured out of particular raw material in which credit is related. It was held that credit may be taken on final product on very day it has become available. It is in this context, nature of MODVAT credit was held to be indefeasible. learned Additional Solicitor General has rightly distinguished this decision by pointing out that this decision does not consider contingency of time limit on availment of credit, and also not in transitionary provision. Under impugned Rule, input credit has been denied per se, but time limit has been placed on its availment. 43. CENVAT Credit Rules prescribe conditions for availment of that credit. rights and privileges accrued during existing law have been saved under Section 174 of Act. If what is saved from earlier regime was conditional, then it cannot be converted to something without conditions in new regime during period of transition. If, before and after GST regime, availment of input credit is conditional, it cannot be that it is 14 1999 (112) ELT 353 (SC) 49 WP 6998.2018 final.doc without any limit in transitional period. With advent of entirely new tax regime, earlier credit could have lapsed, but as and by way of concession it is permitted to be carried forward for limited time. Thus, going by scheme of Act, under Section 140(1), reference to Input Tax Credit is not by way of right, but as concession. 44. Petitioner advanced certain ancillary submissions. First, Section 164(1) contemplates recommendation of GST Council, and GST Council had recommended longer period. It was contended that GST Council recommendations are binding regarding rule-making power. However, this argument overlooks that power under Section 164(2) is without prejudice to power under Section 164(1) regarding recommendation of GST Council. 45. Second, that same relief sought for by Petitioner can be granted under section 54 of Act and, therefore, necessary directions be issued. This argument is advanced for first time across bar with no pleadings or prayers. Respondents had no opportunity to deal with same. 46. Third, scheme of Act is that there is self- declaration which has to confirmed later and, therefore, there is no prejudice to Respondents if credit is given now. It was 50 WP 6998.2018 final.doc contended that submission of return under section 140 is subject to confirmation under provisions governing Assessment. This submission is incorrect. Acceptance of Assessment is not subject to confirmation but being based on principle of self-assessment, is open for verification; which is different aspect. It is contended that claim of input tax credit is in Returns to be filed and Form is not important, and once this procedure is laid down, time limit cannot be provided. Once it is held that rulemaking power exists and placing of time limit on concession is not ultra vires, then further tinkering with statutory scheme on hypertechnical and academic arguments is neither desirable nor necessary. 47. Thus time limit in Rule 117(1) is traceable to rule-making power conferred in Section 164(2). credit envisaged under Section 140(1) being concession, it can be regulated by placing time limit. Therefore, time limit under Rule 117(1) is not ultra-vires of Act. 48. As regards laying of Rule before Parliament, Petitioner contends that laying of Rule before Parliament will not cure defect if there is no rule-making power exist. For this purpose, reliance is placed on decision in case of Hukam Chand v/s. Union of India15. It is contended that fact that 15 1972 (2) SCC 601 51 WP 6998.2018 final.doc Rules have to be laid before Parliament does not confer validity if rule is made not in conformity with Act. In view of our finding that rule-making power exists for Rule 117 and traceable to Section 164, laying Rule before Parliament strengthen case of Respondents for supporting its validity. 49. We now turn to second part of discussion that is challenge to Rule on touchstone of Article 14 of Constitution of India. 50. Petitioner contends that time limit imposed under Rule 117 is arbitrary, reasonable and in violation of Article 14. It is contended that right accrued to Petitioner of input credit is being taken away by impugned Rule. Petitioner contends that section 140 of Act, through its subsections, operate in different scenarios, and need to be treated differently. It is contended that under CENVAT Credit Rules, 2004, taxpayer was entitled to 50% of credit in earlier year of purchase of capital goods and balance 50% in subsequent year and, therefore, on relevant date right to take balance of 50% credit had accrued. It is contended that this right has been saved by saving clause in section 174. Petitioner has placed strong reliance on decisions of Supreme Court in cases of Eicher Motors and Osram Surya (P) Ltd. It is contended that time limit has no 52 WP 6998.2018 final.doc nexus to Act. Respondents have supported impugned legislation contending that without time limit, concept of transitional provisions will become nugatory. 51. This analysis needs be prefixed by referring to scope of judicial scrutiny in matters of economic legislations. When economic legislation is questioned, Courts are slow to strike down provision which may lead to financial complications. Supreme Court has sounded note of caution in cases of R.K Garg v/s. Union of India16, Bhavesh D. Parish v/s. Union of India 17, Director General of Foreign Trade v/s. Kanak Exports 18, Swiss Ribbons Pvt. Ltd. and Ors. vs. Union of India 19. summary of principles laid down is as follows. Taxation issues are highly sensitive and complex. Legislations in economic matters are based on experimentations. Court should decide constitutionality of such legislation by generality of its provisions. Court cannot assess or evaluate impact of provision and whether it would serve purpose in view or not. Trial and error method is inherent in economic endeavours of State. In matters of economic policy, accepted principle is that courts should be cautious to interfere. interference by 16 1981(4) SCC 675 17 2000(5) SCC 471 18 2016(2) SCC 226 19 2019(4) SCC 17 53 WP 6998.2018 final.doc Courts in complex taxation regime can have large-scale ramifications. Unless provision is plainly unjust or glaringly unconstitutional, courts should show judicial restraint. In complex economic matters, rules are generally based on trial and error and their validity cannot be tested on any rigid prior considerations or by applying straitjacket formulas. 52. One of foundations of argument that time limit in Rule 117 is unreasonable is that it takes right. In view of two conclusions we have reached much of force of this argument is diluted. Firstly what is claimed by Petitioner is not right but concession. Secondly, Rule is not ultra-vires. Even on aspect of unreasonableness, judicial pronouncements already hold field. Division Bench of this Court in JCB India Ltd. observed that object and purpose sought to be achieved of not permitting existing arrangement to continue endlessly. For new regime to come into force, transitional arrangements have been made. Division Bench observed that Section 140 has clear nexus to object sought to be achieved and can be struck down as having no such relation or nexus. Gujarat High Court in case of Willowood on same aspect has observed thus in economic matters of such vast scale and broader considerations of State exchequer, cannot be kept out of purview while interpreting statutory provision. Court noted that entire exercise was unprecedented in Indian context. claims of carrying forward 54 WP 6998.2018 final.doc of existing duties and credits during period of migration, therefore, had to be within prescribed time. Court observed that doing away with time-limit for making declarations could cause multiple large-scale claims trickling in for years together after new tax structure is put in place. bench observed this would besides making matching of credits impractical if not impossible, also affect revenue collection estimates. view taken by Gujarat High Court in Willowood is that Rule 117 is not ultra-vires and there is no indefeasible right to carry forward CENVAT credit and stipulation of time limit is reasonable. 53. We do not find that time limit in impugned rule is arbitrary or unreasonable. To plan to allocate resources, it is necessary to know amount of taxes available by particular time. For efficient administration of tax system, certainty, especially in terms of time, is important. Calculations of tax liability dictated by subjective conditions can lead to uncertainty. Such uncertainty makes it difficult to budget and ensure that funds are allocated where they are most required. time limit for availing of input tax credit in transitionary provisions is thus rooted in larger public interest of having certainty in allocation and planning. time limit under Rule 117 is thus not irrelevant. 54. Section 140 read with Rule 117 under Chapter XX 55 WP 6998.2018 final.doc deals with transitional provisions for availment of CENVAT credit. It permits availment of CENVAT credit, however within stipulated transitional period. This availment is not absolute and is with time limit. Upholding only right to carry forward credit and ignoring time limit would make transitional provision unworkable. credit under transitional provision is not right to be exercised in perpetuity. By very nature of transitional provision, it has to be for limited period. 55. Petitioner has placed on record Concept Notes and Flyers issued by CBEC to demonstrate salient features of GST and how input tax credit is core of GST regime. Based on this material and statements and objects and reasons of Act, it is contended that transitional provision is for smooth transition of existing taxpayers to GST regime and it is to avoid cascading effect of taxes. statements and objects of Act cannot, of course, be debated, but nowhere there any indication that for availing of input tax credit in transitional provision there is no time limit. decision of Supreme Court in Sambhaji v. Gangabai20, decision of Allahabad High Court in Global Sugar Ltd. v. Commissioner of Central Excise 21 and decision of Madras High Court in Hospira Health Care India P.Ltd. v. Dev. Commr., MEPZ SEZ & Heous, Chennai22 relied upon by 20 2009 (240) ELT 161 (SC) 21 2016 (334) ELT 604 (All.) 22 2016 (340) ELT 668 (Mad.) 56 WP 6998.2018 final.doc Petitioners are all cases, as rightly pointed out by Respondents are within tax regime. None of these decisions deal with transitional provisions between two tax regimes. 56. Reference is already made to Section 16(4) of Act. Section 16(4) provides that registered person shall not be entitled to take input tax credit in respect of any invoice or debit note for supply of goods or services or both, after due date of furnishing of Return under section 39 for month of September following end of financial year to which such invoice or invoice relating to such debit note pertains or furnishing of relevant annual return, whichever is earlier. Thus even under GST law, input tax credit cannot be availed without any time limit. It cannot be that under GST law, there is time limit, but for transitional period, there is no such time limit. Once under GST law for future transactions time limit is stipulated, then there is nothing unreasonable in stipulated time limit for transitional period. 57. Various decisions of High Courts have been cited by Petitioner regarding Rule 117 and Section 140 of Act wherein directions have been issued in writ jurisdiction for opening TRAN-1 Form. These are Jakap Metind Pvt. Ltd. v/s. Union of India through Secretary and Ors.23. Adinath Industries v. Union 23 Special Civil Application 19951 57 WP 6998.2018 final.doc of India24, Adfert Technologies Pvt.Ltd. v. Union of India 25 Afran Technology Pvt.Ltd, Asiad Paints Ltd v. Union of India 26, Gillette India Limited v. Union of India27, Jakap Metind Pvt.Ltd. v. Union of India28, Jay Bee Industries v. M/s.J.B. Industries v. Union of India29, A.F. Babu v. Union of India 30, Tara Exports v. Union of India31, Siddharth Enterprises v. Nodal Officer32 , Ra Export Siddhartha Enterprise, Triveni Needdles Pvt. Ltd. v. Union of India33, Bhargava Motors v/s. Union of India & Ors. 34, M/s. Blue Bird Pure Pvt. Ltd. v/s. Union of India35. decision in case of Adfert Technologies of Division Bench of Punjab and Haryana High Court relied by Petitioner was one wherein direction was issued to permit revision of incorrect TRAN-1 Form and after noticing decision of Gujarat High Court of Willowood, Division Bench stated that they are not in agreement with view taken. However, we do not find there is no discussion in said decision upholding validity of Rule 117. decision is based primarily on CENVAT credit being vested right. decision of Siddharth Enterprises of Gujarat High Court does not refer to decision in Willowood even though it was rendered prior. These 24 2019-VIL-526-DEL 25 2019-VIL-537-P&H 26 2019-VIL-598 KAR 27 2020-VIL-01-DEL 28 2019-VIL-556-GUJ 29 201-VIL-570-HP 30 2019-VIL-610-KER 31 2019-VIL-432-MAD 32 2019-VIL-442-GUJ 33 2019-VIL-618-DEL 34 2019-VIL-218-DEL WP(C) 1280/2018 dtd 13.05.2019 35 2019(7) TMI 1102 - 2019-VIL-347-DEL 58 WP 6998.2018 final.doc decisions are founded on basis that CENVAT Credit is vested right guaranteed under Article 300A of Constitution of India. In none of decisions, Rule 117 has been struck down as arbitrary. 58. High Courts in above decisions have exercised writ jurisdiction to direct Respondents to give relief to petitioners before it. Courts may have done so in equity jurisdiction. We have concluded that time limit stipulated is neither ultra vires nor unreasonable. Issuing writ would mean overriding this time limit. concept of time limit under this provision is not casual but has larger purpose to serve. GST Act deals with generation and distribution of revenue. collected revenue is expended on various functions for which budgetary allocations are made and time limits are stipulated for execution of various schemes. For fiscal planning, certainty regarding receipt and distribution of revenue is necessary. If relief is to be granted to individual Petitioner overriding time limit on equity, perception of what is equitable will differ from authority to authority. This would lead to uncertainty. operation of this complicated tax system will become unworkable. time limit placed under impugned rule being rooted in need to have certainty in fiscal management, we are of opinion that equity jurisdiction ought not to be exercised. 59 WP 6998.2018 final.doc 59. As another facet of arbitrariness it was argued that insistence on submitting declaration electronically creates classification between those with needed capabilities and equipment and those who do not and hence it is violative of Article 14. There is no merit in this submission. Entire GST system, not only section 140 and Rule 117 envisage electronic filing. It has intricate inter-linking regulated by software and data analysis. Numerous departments and enactments now mandate electronic submission of forms. With ever-expanding sweep of digital data pervading almost all walks of life, it will be retrograde step to declare provision unreasonable because it mandates electronic compliance, especially when enactment in question is intricate tax regime powered by software-based system. 60. To summarize, therefore, time limit stipulated under Rule 117 is neither unreasonable or arbitrary nor violative of Article 14. This rule is in accordance with purpose laid down in Act. 61. Now we turn to third aspect of matter that is meaning of phrase technical difficulties under Rule 117A and role of IT Redressal Cell and whether by creating categories discretion is being fettered; To appreciate Petitioners challenge, procedure to be followed while submitting Form TRAN-1 needs 60 WP 6998.2018 final.doc to be narrated. Respondents have placed on record procedure, which is: First, taxpayer has to log in to GST Portal. Then navigate to TRAN-1 Form in Services Section. If TRAN-1 is already submitted or filed, then Reopen button is provided to taxpayer to modify previously submitted/filed data or for adding missing records. Once taxpayer clicks on Reopen button, then status of TRAN-1 is changed to Reopen. taxpayer then fills up respective sections of TRAN-1 Form and then enters details under various tables such as Table 5A, 5B, 7A, 8 etc. taxpayer then saves TRAN-1 and verifies entered values. After that, TRAN-1 is submitted on GST Portal. After its submission, TRAN-1 credit is calculated based on values in form and entries are made to Electronic Input Tax Credit (ITC) ledger. Then taxpayer is required to authenticate TRAN-1 by attaching digital signature using and file TRAN-1 Form. Then filing process is complete. Thereafter entries of amount being posted in Electronic ITC Ledger can set off liabilities in GSTR-3B. credit of TRAN-1 is credited and posted in ledgers for use to set off liabilities when taxpayer submits TRAN-1 Form. This is method followed by taxpayer. 62. Respondents noted existence of technical difficulties in filing of TRAN-1 and incorporated Rule 117(1A). 61 WP 6998.2018 final.doc Rule 117(1A) has been inserted with effect from 10 September 2018. Rule 117(1A) reads as under: Rule 117: Tax or Duty Credit Carried Forward under any Existing Law or on Goods Held in Stock on Appointed Day (Chapter-XIV: Transitional Provisions) (1) * * * (1A) Notwithstanding anything contained in sub-rule (1), Commissioner may, on recommendations of Council, extend date for submitting declaration electronically in FORM GST TRAN-1 by further period not beyond 31st March, 2019, in respect of registered persons who could not submit said declaration by due date on account of technical difficulties on common portal and in respect of whom Council has made recommendation for such extension. * * * This Rule provides that Commissioner may, on recommendations of Council, extend date for submitting declaration electronically in FORM GST TRAN-1 by further period not beyond 31 March 2019, regarding registered persons who could not submit said declaration by due date because of technical difficulties on common portal and regarding whom GST Council has made recommendation for such extension. 63. First, time limit was 31 March 2019. Now, with 62 WP 6998.2018 final.doc further extension, it is extended to 31 March 2020. However, for extended period to apply, certain criterion has to be satisfied. extension applies to submission of GST TRAN-1 to be made electronically. It applies only to those registered persons who could not submit their declaration by due date under Rule 117(1) because of technical difficulties. technical difficulties have to be ones referable to common portal of GST, and last, it in whose cases Council has made recommendation for extension. 64. In GST Council Meeting held 10 March 2018, grievance redressal mechanism was set up to address issue. This mechanism was called IT Grievance Redressal Cell. IT- Grievance Redressal Cell consists of three members, namely CEO (GSTN), DG (Systems) GBEC and third member from any State nominated by Secretary. GST Council. GSTN, Central and State governments appointed nodal officers to address problem taxpayer faces due to technical difficulties. 65. Details of Grievance Redressal Mechanism is on record. outline is: If taxpayers encounter technical difficulty regarding TRAN-1 Form, he has to apply to Nodal officers. technical difficulty relating to Common Portal and not individual problems and local issues such as non-availability of internet connectivity, power failure or problem of specific 63 WP 6998.2018 final.doc system. application should show bonafide attempts by taxpayer to comply with due process of law. application is forwarded to GSTN, who would on receipt of application, after identifying issue, forward same to IT Grievance Redressal Committee for decision. cases are examined and are categorized broadly reason-wise and then further grouped into two major categories as Category and Category 'B". Category 'A' includes cases in which taxpayer could not file TRAN-1 Form because of technical difficulties, whereas Category B includes cases where detailed analysis at GSTN reveals that there were no technical issues in filing TRAN-1 Form as per system logs. Category 'B' is further subdivided into eleven categories based on claims of taxpayers and cases forwarded by Nodal Officer. System logs regarding filing of TRAN-1 Form are examined to ascertain evidence of error of submission/filing of TRAN-1 Form before due date. In short, if, as per GST system log, there is no evidence of submission/filing of TRAN-1 Form on common portal, it has to be concluded that taxpayer did not try for saving/submitting or filing TRAN-1 Form before due date and, not entitled to benefit of extended period under Rule 117(1A). 66. petitioner contends that ambit of phrase 'technical difficulties' will have to be defined by Court and it cannot be left to IT Grievance Cell of GST Council to define 64 WP 6998.2018 final.doc same. Further, ad-hoc criterion has been devised classifying registered persons into arbitrary groups and for some recommendation is made, and for some, it is rejected. Petitioner contends that is that GST Council cannot delegate this power to IT Grievance Redressal Committee. This submission cannot be accepted. GST Council is not body to resolve technical issues. Therefore, IT Grievance Redressal Mechanism was developed by GST Council. This Committee involved CEO of GST, Network Director General of Systems, CBSC and Nominee from State as technical persons. Based on report of this Technical Committee, further recommendation would be made. Therefore, there is no merit in contention that power could not have been delegated to IT Grievance Redressal Committee. 67. Petitioner then contends that phrase `technical difficulty' in Rule 117(1A) has to be broadly construed. It is not possible to do so. Rule 117(1A) refers to technical difficulties in online submission of TRAN-1 Form on common portal. These technical difficulties are not ones faced in general but on common portal of GST. meaning of phrase `technical difficulty is, thus clear that is technical difficulties are those which arise at common portal of GST. 68. IT Grievance Redressal Cell has taken system 65 WP 6998.2018 final.doc log on common portal as evidence of attempts made. There is no merit in criticism of Petitioner in taking system logs as basis for determining technical difficulties. Since Rule 117(1A) refers only to technical difficulties on common portal, record on common portal would be material piece of evidence. Since phrase technical difficulty does not envisage any other difficulties, IT Grievance Redressal Committee rightly evolved criteria of system logs. system log is auto-generated data which records activities performed. system log maintained by portal shows details of requests made at page. This data is not manually collected but auto-generated. From system log, it can be ascertained whether attempt was made to access data. Therefore, not only there is nothing arbitrary insisting on system log but correct criterion to be adopted. 69. Petitioner then contended that insisting on system log as proof from very system which has technical difficulties, is arbitrary and unworkable. There is no merit in this contention. It is not case that common portal had stopped working or that none of taxpayers could submit declarations. As per data given by Respondents, thousands of registered users could submit their TRAN-1 Form declarations. In affidavit-in-reply filed by Commissioner, number of entries made between last four days of closing facility of TRAN-1 has been placed on record. 66 WP 6998.2018 final.doc These are : 24 December 2017 36349; 25 December 2017 97939; 26 December 2017 233455and on 27 December 2017 165723. object of bringing in Rule 117(1A) did acknowledge that certain registered user encountered technical difficulties in common portal. However, it does not mean that common portal had stopped working; only that some registered users could not submit their forms. Whether they made effect could be seen from system logs. 70. There would be some who never attempted to submit TRAN-1 Form. There would be some who attempted but encountered difficulties at their end. There would some who encountered difficulties on common portal. Since it is only third category covered by Rule 117(1A), it had to be asserted from system log of common portal itself. Insisting on system log as proof of technical difficulties, thus, is neither arbitrary. Respondents have pointed out that cases where there were technical difficulties on common portal as seen from system log, recommendations have been made in their favour. It is also pointed out that many taxpayers did not file their applications until last minute. It has been tried to be suggested that filing of TRAN-1 Form was deliberately delayed by some to create fake invoices. 67 WP 6998.2018 final.doc 71. Petitioner contended that categorization based on system log amounts to fettering of discretion. There is no merit in this submission. categorization made by Cell is not fettering discretion but involving rules of evidence to determine whether registered user encountered difficulties while submitting forms on common portal. It is only if registered user encountered technical difficulties on common portal, that Rule 117(1A) comes into play. 72. In some decisions referred to in para 57, Courts have directed Respondents to open portal. It is observed therein that many of registered persons come from rural and semi- literate background and they may have no record, and they cannot be made to suffer when systems of Respondents were not efficient. This approach proceeds on basis that once there is acknowledgment of technical difficulties, liberal view must be taken. However, though Respondents have accepted there have been technical difficulties, they have not admitted complete failure. mechanism has been set up. uniform and technically capable criteria to determine technical difficulties on portal of system logs has been evolved. There is no allegation, nor there is any question of any personal malafides while ascertaining system logs. system logs are generated automatically and based on such system logs categorization has been made. 68 WP 6998.2018 final.doc 73. input tax credit in transitional provision is concession to be utilised in time-bound manner, and further extension is given if GST Council finds that there was technical difficulty at its end. If there is no technical difficulty on common portal for registered user, this additional concession is not extended. Whether to grant further concession as Rule 117(1A) will be determined from examination system logs from portal. Exercise of equity jurisdiction in some cases and not in other cases would cause anomalous situation, particularly when time limit has been placed in taxing statute for achieving certainty and finality. 74. Last, turning now to question of relief to present Petitioner. reply affidavit has been filed wherein it is stated that no details of technical difficulties were stated in representations emailed nor any proof was provided. It is stated that Petitioner sent email on 27 December 2017 at 17.53 which was final date for filing TRAN-1 Form. It is stated that case of Petitioner was discussed by IT Redressal Cell in its meeting on 27 August 2018 and as per GST System log, no evidence was available. decision was communicated to Petitioner on 10 July 2018. Petitioner has filed rejoinder, and it is reiterated that Petitioner has now produced screen-shot of browsing 69 WP 6998.2018 final.doc history extracted from laptop of one of it s employee which reveals that portal was accessed on 27 December 2017. It is stated that history was extracted in March 2019 and there is possibility that it may not contain full details and also there may not be complete list of browsing history. 75. Petitioner submits that based on browsing history now produced by way of rejoinder, fact that Petitioner attempted and encountered technical difficulties be upheld. This submission cannot be accepted. We have held that phrase technical difficulty in Rule 117(1A) of Rules is in relation to common portal and criteria for determining error on common portal is system log on common portal. system log is unquestionable criterion for ascertaining activity on portal. adjudication based on contemporaneous material besides system log will make ascertainment of technical difficulties unguided. existence of technical difficulties as seen from system logs at common portal is cogent proof. In absence thereof, adjudication will be in realm of subjectively. system log on common portal does not support case of Petitioner. This has been communicated to Petitioner. No direction thus can be issued to Respondents now to treat case of Petitioner as falling within ambit of Rule 117(1A). 70 WP 6998.2018 final.doc 76. To conclude, time limit stipulated under Rule 117 of Rules is not ultra vires of Act. This Rule is traceable to power conferred under section 164(2) of Act. time limit stipulated in Rule 117 is in consonance with transitional nature of enactment, and it is neither arbitrary nor unreasonable. Availment of input tax credit under section 140(1) is concession attached with conditions of its exercise within time limit. IT Grievance Redressal Cell is set up by GST Council to examine existence of technical difficulties on common portal. Sufficient guidance is provided in definition of technical difficulty in Rule 117(1A). Examining system log to ascertain existence of technical difficulties on common portal for registered persons, is not arbitrary, nor does it lead to fettering of discretion by authorities. Those registered persons who could not submit declaration by due date because of technical difficulties on common portal as can be evidenced from system logs are given extension on recommendation of Council. Where no such evidence is forthcoming, no recommendation is made. In Petitioner s case, no such proof emerges and, therefore, no direction as sought for can be issued. 71 WP 6998.2018 final.doc 77 . As result, Petition is dismissed. Rule discharged. No costs. M.S. KARNIK, J. NITIN JAMDAR, J. Digitally signed Jyoti P. by Jyoti P. Pawar Pawar Date: 2020.03.20 16:58:34 +0530 Nelco Limited v. Union of India / Central Board of Indirect Taxes and Customs / State of Maharashtra / Goods and Services Tax Council / Commissioner of State Tax / Goods and Services Tax Network