IN HIGH COURT OF DELHI AT NEW DELHI Reserved on: 02.03.2020 Pronounced on: 05.05.2020 + W.P.(C) 11040/2018 and C.M. No. 42982/2018 BRAND EQUITY TREATIES LIMITED ..... Petitioner Through: Mr. Abhishek A. Rastogi, Advocate. versus UNION OF INDIA & ORS. ..... Respondents Through: Ms. Shiva Lakshmi, CGSC for UOI. Mr. Amit Bansal, SSC with Mr.AmanRewaria and Ms. Vipasha Mishra, Advocates for respondent No. 3. W.P.(C) 196/2019& CM APPL. 965/2019 MICROMAX INFORMATICS LTD. ..... Petitioner Through: Mr. Alok Yadav, Advocate. versus UNION OF INDIA & ANR. ..... Respondents Through: Mr. Amit Bansal, SSC with Mr.AmanRewaria and Ms. Vipasha Mishra, Advocates for respondent No. 2. + W.P.(C) 8496/2019 DEVELOPER GROUP INDIA PRIVATE LIMITED..... Petitioner Through: Ms. Kavita Jha, Mr. Shammi Kapoor, Ms. Kritika Kapoor and Ms. Swati Agarwal, Advocates. W.P.(C) 11040/2018& connected matters Page 1 of 33 versus UNION OF INDIA & ORS. ..... Respondents Through: Ms. Shiva Lakshmi, CGSC with Ms. Nidhi Mohan Parashar, G.P for Respondent No. 1/ UOI. Mr. Amit Bansal, SSC with Mr.AmanRewaria and Ms. Vipasha Mishra, Advocates for respondent Nos. 2 & 3. + W.P.(C) 13203/2019 RELIANCE ELEKTRIK WORKS ..... Petitioner Through: Mr. Ruchir Bhatia and Ms. Madhura M.N., Advocates. versus UNION OF INDIA & ORS. ..... Respondents Through: Mr. AshimSood, CGSC with Mr.Armaan Pratap Singh, Advocates for respondent No. 1. Mr. Anuj Aggarwal and Mr. Ankit Monga, Advocates for respondent No.3/ GNCTD. Mr. Harpreet Singh and Ms. Suhani Mathur, Advocates for GST. CORAM: HON BLE MR.JUSTICE VIPIN SANGHI HON BLE JUSTICE SANJEEV NARULA JUDGMENT W.P.(C) 11040/2018& connected matters Page 2 of 33 SANJEEV NARULA, J 1. All four writ petitions seek identical relief in nature of writ of Mandamus directing respondents to permit petitioners to avail input tax credit of accumulated CENVAT credit as of 30th June, 2017 by filing declaration Form TRAN-1 beyond period provided under Central Goods and Services Tax Rules, 2017 (hereinafter, CGST Rules ). Additionally, petitioners also assail Rule 117 of CGST Rules on ground that it is arbitrary, unconstitutional and violative of Article 14 to extent it imposes time limit for carrying forward CENVAT credit to GST regime. However, all petitioners have unanimously stated that if Court were to give directions to respondents to permit them to file statutory Form TRAN-1 to avail input tax credit, they would be satisfied and not press for relief of challenging vires of provisions of Act. 2. This Court has allowed numerous petitions, relating to availment of input tax credit on account of delayed filing of Form TRAN-1. controversy in present petitions is no different, but nonetheless respondents have strongly objected to directions sought in present petitions, contending that factual situation in each one of present cases is quite different, and does not merit relief granted to other taxpayers. It is argued that Court has allowed petitions only in those cases, where delay had been occasioned on account of technical glitches in Goods and Services Tax Network (GSTN). facts of instant cases are substantially distinguishable, and do not indicate or allege any such error or glitch on network of respondents relating to filing of TRAN-1 forms. It is W.P.(C) 11040/2018& connected matters Page 3 of 33 further contended that pleadings disclose that delay in their cases did not occur on account of any technical glitch on portal, but arose owing to other technical difficulties at end of assessees i.e. petitioners. Petitioners controvert stand of respondent, and contend that they are entitled to similar relief, notwithstanding fact that cases of petitioners may not be strictly covered by Circular of respondents specifically dealing with cases where technical glitches had restrained or blocked or caused difficulties to taxpayers from filing of TRAN-1 forms on common GST portal. 3. Regardless of respondents objection that there were no technical anomalies in fling vis-a-vis petitioners, we perceive no significant difference in circumstances recounted in cases before us in comparison to those decided earlier. Pertinently, since cause for not filing TRAN-1 Form within time is sufficiently explained and justified, we see no good ground or reason to deny petitioners another opportunity to belatedly file their TRAN-1 forms. Nevertheless, since respondents fervently contest petitions, we permitted learned counsels to make elaborate submissions as we feel that authoritative decision is necessary to put controversy to rest. Thus, this decision, exhaustively sets forth ourreasons for allowing petitions. 4. facts of each case are different, however, since controversy is identical, it is not necessary to meticulously note details of each case and it would suffice to take note of only essential facts of each case. W.P.(C) 11040/2018& connected matters Page 4 of 33 W.P. No. 8496/2019 5. petitioner is in business of advertising, brand promotion and public relation management, as part of Bennett Coleman Group of companies [Times Group]. It operates from various states throughout India, including New Delhi. It was registered under provisions of Chapter V of Finance Act, 1994 for service tax and was discharging its liability by way of filing service tax returns. service tax return for period from April, 2017 to June, 2017 was filed on 11th August, 2018 and same exhibited accumulated CENVAT credit of INR 72,80,5293. This accumulated CENVAT credit balance is inter alia attributable to New Delhi premises of petitioner. Petitioner had CENVAT credit reflected in service tax return for period April, 2017 to June, 2017 and was eligible to carry forward said CENVAT credit amounting to Rs. 60,15,498/-. Petitioner contends that on 2nd January, 2018, based on advice of its consultant, it was under belief that it was eligible for refund under Section 142(3) of CGST Act, and consultant filed online refund application. However due to technical glitch, error appeared on screen. Thereafter, on 13th February, 2018, when petitioners consultant again tried to upload refund application for CENVAT credit, yet again error occurred and message proxy error was displayed on screen. Petitioner s consultant visited office of Assistant Commissioner of GST to enquire about error and was informed that Petitioner was not eligible for refund under Section 142 (3) of Act. On being apprised of this legal position, physical copy of Form TRAN-1 was filed on 24th August, 2018 along with supporting invoices before Deputy/Assistant W.P.(C) 11040/2018& connected matters Page 5 of 33 Commissioner of Central Excise, GST East Division. Petitioner was informed that application would be verified and it would be intimated about outcome. Thereafter, vide letter dated 30th August, 2018, additional documents as required by respondents were also submitted, but nothing was heard in this regard. Eventually, petitioner filed writ petition W.P.(C) 3099/2019 before this Court praying for refund or carry forward of all accumulated CENVAT credit. Vide order dated 28th March, 2019, respondents were directed to obtain instructions as to whether refund/carry forward credit application could be processed and if GST council can consider such cases of hardship on individual basis. 6. Petitioner has now filed present petition seeking writ in nature of Certiorari impugning Rule 117(1) of CGST rules as ultravires Section 140(1) of CGST Act and in alternative, seeking directions to read down provisions of Rule 117. W.P. (C) 11040/2019 7. In this case, petitioner claims that in terms of latest service tax return from April, 2017 to June, 2017, it had accumulated CENVAT credit balance of INR 72,80,529/-. Petitioner forms part of bigger conglomerate and tax operations are undertaken at group level. Owing to dependence at group level in context of tax compliances and multiple entities involved, petitioner was unable to file declaration in Form TRAN-1 within prescribed due date. As result, it was deprived of taking forward accumulated credit in GST regime. W.P.(C) 11040/2018& connected matters Page 6 of 33 W.P.(C) 196/2019 8. In terms of last service tax return, petitioner had CENVAT credit of Rs. 6,04,47,033/-. It submitted form GST TRAN-1 online on 24th November, 2017 in order to avail transitional credit. Thereafter, it received letter dated 1st January, 2018 from office of Assistant Commissioner GST seeking its response in relation to verification of input tax credit claimed in form TRAN-1. While collating documents in response to said communication, petitioner realised that credit of Rs.6,04,47,033/- was mistakenly not carried forward. Petitioner again tried to submit said form on GST common portal with view to avail this credit. Additionally, petitioner replied to aforenoted communication dated 1st January, 2018 explaining that it had inadvertently missed reflecting correct CENVAT credit in Form, in conformity with last service tax return. In support of its claim, petitioner also furnished last service tax return [ST-3 form]. On 6th April, 2018, petitioner made another reference to respondents highlighting Circular issued by Central Board of Indirect Taxes and Customs wherein mechanism was introduced to assist taxpayers who had faced difficulties owing to technical glitches. Despite repeated follow ups, no reply was received from respondents and finally, vide letter dated 9th May, 2018, respondents informed petitioner that credit of Rs. 6,04,47,033/- was not populated in TRAN-1 and, thus, credit thereof cannot be extended to petitioner. W.P.(C) 13203/2019 9. In this case as well, petitioner contends that it had been trying to upload W.P.(C) 11040/2018& connected matters Page 7 of 33 its claim for carrying forward credit in form GST TRAN-1 but could not do so due to error in system of respondents. Petitioner enquired from other professionals and learnt that apart from it, large number of assessees were facing similar problems and could not upload claim of input credit on account of system error/failure. Petitioner submits that on account of utter confusion and chaos that resulted in failure to upload Form GSTR TRAN-1, it could not upload claim on common portal within time. Petitioner also engaged in correspondence with respondents, however there has been no effective resolution to its grievance. SUBMISSIONS OF PARTIES 10. Learned counsels for petitioners have strongly relied upon judgment in A.B. Pal Electricals v Union of India (W.P.(C) 6537/2019 (decided on 17.12.2019) and several others, which have been referred therein to canvass that instant cases are squarely covered by said decision. At same time it is urged that since GST system at relevant point of time, and even presently, is in nascent trial and error phase, petitioners should not be made to suffer on account of inefficiency in systems of respondents; by denying them credit of accumulated CENVAT credit on due date. Besides, it was argued that CENVAT credit accumulated in erstwhile regime represents property of petitioner which is vested right in their favour. Such accrued or vested right cannot be taken away by respondents on account of failure to fulfil conditions which are merely procedural in nature. accumulated CENVAT credit is property of assessee and constitutionally protected right under Article 300A of Constitution, W.P.(C) 11040/2018& connected matters Page 8 of 33 which cannot be taken away by framing Rules without there being any substantive provision in this regard under Act. On another note, it is urged that time limit specified in Rule 117 of CGST Rules is procedural in nature, and not mandatory provision, and thus period provided therein cannot be enforced so as deprive petitioners from availing their vested right. In support of this contention, reliance is placed upon decision of Supreme Court in case of SCG Contracts India Pvt. Ltd. vs. KS Chamankar Infrastructure Pvt. Ltd. 2019 SCC OnLine SC 226. 11. Mr. Amit Bansal, and other learned senior standing counsels for Revenue, on other hand, have strongly opposed petitions. They have argued that petitioners do not deserve any sympathy from this Court, as facts of each case exhibit casual approach on their part. Petitioners failure to file declaration Form TRAN-1 within due date is not attributable to any technical glitches while uploading forms. delay is result of their follies and do not warrant relief similar to what has been granted by this Court in several other cases. It is also pointed out that some of petitioners attempted to file TRAN-1 for first time after expiry of last date for filing TRAN-1, as admitted in pleadings. petitioners were negligent, and do not deserve any leniency. Mr. Bansal defended Rule 117 of CGST rules by arguing that under Sub-section (1) of Section 164 of CGST Act, Government is authorised to make rules for carrying out provisions of Act on recommendation of Council. He submitted that CGST Rules laid down by Central Government, including Rules impugned in present petition, flow from Act and are in consonance with intention of legislature. Mr. Bansal W.P.(C) 11040/2018& connected matters Page 9 of 33 emphasized on words in such manner as may be prescribed which are appearing in Sub-Section (1) of Section 140 as follows: 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 carried forward in return relating to period ending with day immediately preceding appointed day, furnished by him under existing law in such manner as may be prescribed (emphasis supplied) He submits that this provision empowers Government to fix time frame for availing carry forward of input tax credit by transitioning CENVAT credit into GST regime. He further submits that benefit of taking credit is not vested right of assessee and certainly cannot be claimed in perpetuity. same is subject to certain conditions, safeguards and limitations in such manner as may be prescribed. Mr. Bansal further argued that input tax credit is in nature of benefit/concession extended as per scheme of this statute. rules, therefore, can be framed to limit benefit while extending concession. In support of his submissions, Revenue relied upon case of Willowood Chemicals Pvt. Ltd. vs. Union of India 2018 (19 G.S.T.L 228 Gujarat), and ALD Automotive Pvt. Ltd. vs. Commercial Tax Officer 2018 (364) ELT 3 (SC). ANALYSIS AND CONCLUSION 12. On 1st July, 2017, new indirect tax regime was introduced in country by way of enactments, including Central Goods and Services Tax Act, 2017 (CGST Act). CGST Act introduced transitionary provisions to enable taxpayers to migrate from erstwhile indirect tax W.P.(C) 11040/2018& connected matters Page 10 of 33 regime to new GST regime. Section 140 of CGST Act deals with transitionary provisions. Section 140 has several sub-clauses, however, since all four petitioners are covered by sub clause (1) of Section 140, we are focusing on said provision alone, and same reads as under: 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 carried forward in 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. 13. In pursuance of above noted provision, respondent No.1 framed Central Goods and Services Tax Rules, 2017 ( CGST Rules ). Rule 117 of said rules imposed time limit of 90 days for availing benefit of accumulated CENVAT credit as provided under Section 140 (1) in its input tax credit register under CGST Act. said Rule reads as under: 117. Tax or duty credit carried forward under any existing law or on goods held in stock on appointed day.- (1) Every registered person entitled to take credit of input tax W.P.(C) 11040/2018& connected matters Page 11 of 33 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 of eligible duties and taxes, as defined in Explanation 2 to section 140, to which he is entitled under provisions of said section: Provided that Commissioner may, on recommendations of Council, extend period of ninety days by further period not exceeding ninety days. Provided further that where inputs have been received from Export Oriented Unit or unit located in Electronic Hardware Technology Park, credit shall be allowed to extent as provided in sub-rule (7) of rule 3 of CENVAT Credit Rules, 2004. [(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 December, 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.] (2) Every declaration under sub-rule (1) shall- (a) in case of claim under sub-section (2) of section 140, specify separately following particulars in respect of every item of capital goods as on appointed day- (i) amount of tax or duty availed or utilized by way of input tax credit under each of existing laws till appointed day; and (ii) amount of tax or duty yet to be availed or utilized by way of input tax credit under each of existing laws till appointed day; (b) in case of claim under sub-section (3) or clause (b) of sub-section (4) or sub-section (6) or sub-section (8) of section 140, specify separately details of stock held on appointed day; (c) in case of claim under sub-section (5) of section 140, W.P.(C) 11040/2018& connected matters Page 12 of 33 furnish following details, namely: (i) name of supplier, serial number and date of issue of invoice by supplier or any document on basis of which credit of input tax was admissible under existing law; (ii) description and value of goods or services; (iii) quantity in case of goods and unit or unit quantity code thereof; (iv) amount of eligible taxes and duties or, as case may be, value added tax [or entry tax] charged by supplier in respect of goods or services; and (v) date on which receipt of goods or services is entered in books of account of recipient. 14. transition from erstwhile regime to GST for availment of CENVAT credit was to be by way of declaration to be submitted electronically in Form GST TRAN-1. date prescribed for filing of said Form was extended several times by way of orders issued from time to time, finally till 27th December, 2019. Several taxpayers however could not meet deadline. This was on account of several factors - predominantly being inadequacies in network of respondents, which failed to meet expectations and serve needs of taxpayers. Thousands of taxpayers complained that there was low bandwidth and despite several attempts being made on GST Network, they were unsuccessful in filing statutory GST TRAN-1 Form online. Scores of complaints were made on portal and it was also brought to notice of government. technical difficulties faced by taxpayer were acknowledged and IT Grievance Redressal Committee was constituted and assigned task of redressing grievance of taxpayers. recommendations of Grievance Redressal Committee were also brought to notice of GST Council W.P.(C) 11040/2018& connected matters Page 13 of 33 and matter was deliberated upon. Several cases got settled at government level, however some cases were contested on ground that taxpayers did not put forward any evidence to suggest that they faced any technical glitch on portal that prevented them to submit GST TRAN-1 Form within prescribed time limit. Many such matters travelled to courts. Majority of them were allowed in favour of taxpayers, and directions were issued to respondents to permit filing of TRAN-1 Form beyond extended date. Some cases where such reliefs have been granted by this Court are M/s Blue Bird Pure Pvt. Limited vs. Union of India 2019 SCC OnLine 9250; SARE Realty Projects Pvt. Limited vs. Union of India [W.P.(C) 1300/2018decided on 1st August, 2018] ,Bhargava Motors vs. Union of India [W.P.(C) 1280/2019 decision dated 13th May, 2019] ; Kusum Enterprises Pvt. Limited vs. Union of India [W.P.(C) 7423/2019 decided on 12th July, 2019]. It would also be worthwhile to note that in this period, government also acknowledged that on account of technical difficulties, taxpayers were indeed unable to file statutory form within time and CBIC vide notifications issued from time to time, extended date prescribed for filing of Form GST TRAN-1 under Rule 117 (1A) of CGST Rules. This period, as on date, is being extended by various notifications. Notably, vide Notification 48/2018-CT dated 10th September, 2018, government inserted Sub-rule (1A) to Rule 117, whereby, on recommendation of Council, it is now permissible for Commissioner to extend date for submitting declaration electronically in Form GST TRAN-1, by further period 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 W.P.(C) 11040/2018& connected matters Page 14 of 33 whom Council has made recommendation for such extension. said Sub-rule, reads as under: [(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 December, 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 insertion of Sub-rule 1(A) and, thereafter, extensions being granted for filing of GST TRAN-1, notwithstanding period envisaged under sub rule (1) of Rule 117, demonstrates that respondents recognize fact that registered persons were not able to upload GST TRAN-1 due to technical difficulties on common portal. This also substantiates that period for filing TRAN-1 is not considered either by legislature, or executive as sacrosanct or mandatory. 15. In above factual background, in some of cases that came up before this Court, petitioners cited difficulties in filing TRAN-1 Form which were of different nature. In some cases, there were bonafide errors on part of taxpayer and in others, difficulty arose on account of lack of understanding of complete overhaul of indirect tax system; or complicated filing procedure and statutory forms resulting in erroneous information being stated therein. Even in such cases, to note few, this Court has declined to make differentiation and given benefit of doubt to taxpayers, realizing that Respondent s network and W.P.(C) 11040/2018& connected matters Page 15 of 33 system, and change, had posed multifarious problems that require reasonable approach. One such petition has been preferred by Sales Tax Bar Association [W.P (c) No. 9575/2017] narrating scores of technical problems being faced on portal. We adopted proactive approach in said matter and have endeavoured to identify root cause for failure of network to work seamlessly. In said proceedings, we had also held special hearing inviting senior officials from GSTN network as well as officers of Council and policy makers. As result of such deliberations, some headway has been made and recently we were informed that respondents have revamped GST redressal mechanism so as to address problems at grass-root level. upshot of this experience is that GSTN network, indeed, is riddled with shortcomings and inadequacies. This is palpably evident from sheer number of cases being presented before us, in relation to such technical difficulties and inadequacies. benchmark, in our view, is that online system brought into force by GSTN Ltd. should be able to perform all functions and should have all flexibilities/options, which were available in pre-GST regime.The problems on GSTN cannot be wished away, and have to be resolved in right earnest. This requires sensitivity on part of Government which has, unfortunately, not been exhibited in adequate measure. 16. Now, coming back to facts of present cases. Are facts before us such, as to deny petitioners relief extended to taxpayers covered by category of technical glitches or technical difficulties ? facts of each case enumerated above indicate that petitioners have, either, not W.P.(C) 11040/2018& connected matters Page 16 of 33 been vigilant of timelines, or have been victims of chaos and confusion that was prevailing at time when GST regime was introduced. As result, Petitioners may not have concrete evidence in their hand to convincingly exhibit that they faced technical issue on GSTN portal while uploading declaration in GST TRAN-1. We were faced with similar situation in case of AB Pal Electricals Pvt. Ltd. vs. Union of India in W.P.(C) 6537/2019 decided vide judgmentdated 17th December, 2019. In said case, assessee could not file form within prescribed time for reason that Managing Director of company was not keeping well, and as result was unable to attend to business affairs of company for long time. personnel responsible for dealing with compliances required to be made by company, constantly reported that GST portal was not working properly and, therefore, they were unable to access portal and file requisite details. When Managing Director recovered from his illness, he followed up with authorities by submitting representation seeking benefit of CBIC s orders issued from time to time-extending last date for submission of TRAN-1 Form. case was considered by GST Council, but it failed to redress his grievance and matter reached before us. We considered situation and accepted respondents contention that case of petitioner could not be strictly considered as one covered by situation of technical glitches . Yet, we extended benefit of Circular to said petitioner in following terms: 4. Petitioner relies upon several decisions of this Court including M/s Blue Bird Pure Pvt. Ltd vs Union of India and Ors, 2019 SCC OnLine 9250 and Sare Realty Projects Private W.P.(C) 11040/2018& connected matters Page 17 of 33 Limited vs Union Of India,W.P. (C) NO. 1300/2018, decided on 01.08.2018to urge that Court has granted reliefs to several other parties who were in similar situation. 5. We have considered submissions of parties. nature of reliefs sought in present petition and facts disclosed herein is fully covered by decision of this Court in M/s Blue Bird Pure Pvt. Ltd (supra) decided on 22.07.2019, wherein, following decisions of this Court in Bhargava Motors v. Union of India, decision dated 13th May, 2019 in WP (C) 1280/2018 and Kusum Enterprises Pvt. Ltd. v. Union of India, 2019-TIOL-1509-HC-DEL-GST, Court had directed respondents to either open online portal or to enable petitioner to file rectified TRAN-1 electronically or accept same manually. said decision has also been followed by this court in M/s Aadinath Industries &Anr vs Union of India, W.P. (C) 9775/2019, decided on 20.09.2019; Lease Plan India Private Limited vs Government of National Capital Territory of Delhi and Ors, W.P.(C) 3309/2019, decided on 13.09.2019; Godrej & Boyce Mfg. Co. Ltd. Through its Branch Commercial Manager vs Union of India, W.P.(C) 8075/2019, decided on 15.10.2019. decision of this Court in Krish Automotors Pvt. Ltd. v UOI 2019-TIOL-2153-HC-DEL-GST has also been followed by Punjab & Haryana High Court in Adfert Technologies Pvt Ltd v Union of India in CWP No. 30949/2018 (O&M) decided on 04.11.2019.The relevant paragraphs of M/sBlue Bird (supra) read as under: 10. Having carefully examined those decisions, Court is unable to find any distinguishing feature that should deny Petitioner relief similar to one granted in those cases. In those cases also, there was some error committed by Petitioners which they were unable to rectify in TRAN-1 Form and as result of which, they could not file returns in TRAN-2 Form and avail of credit which they were entitled to. In both said decisions, Court noticed that GST system is still in trial and error phase insofar as its implementation is concerned. It was observed in Bhargava Motors (supra) as under: W.P.(C) 11040/2018& connected matters Page 18 of 33 10. GST System is still in trial and error phase as far as its implementation is concerned. Ever since date GSTN became operational, this Court has been approached by dealers facing genuine difficulties in filing returns, claiming input tax credit through GST portal. Court's attention has been drawn to decision of Madurai Bench of Madras High Court dated 10th September, 2018 in W.P. (MD) No. 18532/2018 (Tara Exports v. Union of India) where after acknowledging procedural difficulties in claiming input tax credit in TRAN-1 form that Court directed respondents either to open portal, so as to enable petitioner to file TRAN1 electronically for claiming transitional credit or accept manually filed TRAN1 and to allow input credit claimed after processing same, if it is otherwise eligible in law . 11. In present case also Court is satisfied that Petitioner's difficulty in filling up correct credit amount in TRAN-1 form is genuine one which should not preclude him from having its claim examined by authorities in accordance with law. direction is accordingly issued to Respondents to either open portal so as to enable Petitioner to again file TRAN-1 electronically or to accept manually filed TRAN-1 on or before 31st May, 2019. Petitioner's claims will thereafter be processed in accordance with law. 12. With view to ensure that in future such glitches can be overcome, Court directs Respondents to consider providing in software itself facility of trader/dealer being able to save onto his/her system filled up form and also facility for reviewing form that has been filled up before its submission. It should also permit dealer to print out filled up form which will contain date/time of its submission online. Respondents will also consider whether there can be message that pops up by way of acknowledgement that Form with credit claimed has been correctly uploaded. W.P.(C) 11040/2018& connected matters Page 19 of 33 11. Similar directions were issued by this Court in Kusum Enterprises Pvt. Ltd. (supra). 12. In present case, Court is satisfied that, although failure was on part of Petitioner to fill up data concerning its stock in Column 7(d) of Form TRAN- instead of Column 7(a), error was inadvertent. Respondents ought to have provided in system itself facility for rectification of such errors which are clearly bona fide. It should be noted at this stage that although system provided for revision of return, deadline for making revision coincided with last date for filing return i.e. 27th December, 2017. Thus, such facility was rendered impractical and meaningless. 6. factual position in present case is not any different. Though, case of petitioner cannot be strictly categorized as covered by technical glitches , however, as held in M/sBlue Bird (supra), GST System is still in trial and error phase as far as its implementation is concerned and although failure was on part of Petitioner, error was inadvertent. petitioner does not have any evidence or proof in support of his submission that personnel responsible for dealing with compliances was unable to file requisite Form due to non-functioning of GST Portal. However, we have noticed that in large number of matters, petitioner have similarly complained that before deadline, they were not able to access GST Portal. This could be presumably because of low bandwidth, given fact that before deadline, large number of tax payers all over country, were trying to submit declaration in form TRAN-1. In these circumstances, we would thus give benefit of doubt to petitioner. 7. At this juncture, it may be noted that as per Notification No.49/2019 dated 09.10.2019 issued by CBIC, date prescribed for filing of Form GST TRAN-1 under Rule 117 (1A) of CGST Rules has been extended to 31.12.2019. This itself demonstrates that Respondents recognise fact that registered persons were not able to upload Form GST TRAN- W.P.(C) 11040/2018& connected matters Page 20 of 33 1 due to glitches in system. It is not fair to expect that each person who may not have been able to upload Form GST TRAN-1 should have preserved some evidence of it such as, by taking screen shot. Many of registered dealers/traders come from rural/semiliterate background. They may not have had presence of mind to create any record of their having tried, and failed, to upload Form GST TRAN-1. They cannot be made to suffer in this background, particularly, when systems of Repsondents were not efficient. From documents placed on record, it emanates that Respondents have no cogent ground to deny benefit of Notification No. 49/2019 dated 09.10.2019 issued specifically to grant relief to taxpayers who faced difficulty in filing Form GST TRAN-1 due to technical glitches. 8. We may further add that credit standing in favour of assessee is property and assessee could not be deprived of said property save by authority of law in terms of Article 300 (A) of Constitution of India. There is no law brought to our notice which extinguishes said right to property of assessee in credit standing in their favour. 9. Thus, we allow present petition and direct respondents to either open online portal so as to enable petitioner to file Form TRAN-1 electronically, or to accept same manually on or before 31.12.2019. Respondents shall process petitioner s claim in accordance with law once Form GST TRAN 1 is filed. petition is allowed in aforesaid terms. 17. above decision would also cover case of Petitioners, and there can be no two views about this proposition and we would like to extend similar benefit to them. Nevertheless, let s delve into more fundamental question - Whether Government could curtail accrued and vested right, and restrict it to 90 days by subordinate legislation? To answer this vexed query, let s first examine legal provisions. Sub-section (1) of Section 140 which deals with transitory provision, permits carry W.P.(C) 11040/2018& connected matters Page 21 of 33 forward of CENVAT credit. This presupposes that amount of CENVAT credit of eligible duties has therefore accrued and is existing and reflected in CENVAT credit register. Sub-Section (1) of Section 140 enables registered person to carry forward such credit in return relating to period ending with day (30th June, 2017) immediately preceding appointed date which is 1st July, 2017 furnished by him under existing law. provisions of Service Tax under Chapter V of Finance Act stood repealed by virtue of GST legislation as provided under Section 174 of CGST Act. Thus, on appointed date, credits which existed under previous regime were required to be transitioned to new regime. This credit in every sense stood accumulated, acquired and vested on appointed date as it was reflected in said CENVAT credit register in previous regime. On enactment of CGST Act, no mechanism was provided for refund of credit that existed on said date. only mechanism was for utilization of such credit by migrating same to GST regime by way of filing declarationForm TRAN-1. manner and procedure to carry forward said CENVAT credit under Sub- Section (1) of Section 140 was to be prescribed . word prescribed has also been defined under Section 2(87) to mean prescribed by Rules made under this act on recommendation of council . This brings us to Rule 117 of CGST Rules, relevant provision prescribing manner in which CENVAT credit has to be transitioned. Initially, time limit prescribed under Rule 117 for transitioning was 90 days, as explained above, was extended from time to time. Evidently, there is no other provision in Act prescribing time limit for transition of CENVAT credit, and same has been introduced only by way of Rule 117. This provision also contains W.P.(C) 11040/2018& connected matters Page 22 of 33 proviso, which vests power with Commissioner to extend period on recommendations of Council. Indeed, Commissioner has exercised such power and time period which was initially to expire after 90 days, has been, as matter of fact, extended till 29th December, 2017. In fact, as noticed above, under Sub-Rule (1A) of Rule 117, for specific class of persons, time limit has gone way beyond period originally envisaged, and has still not expired. Thus, there is nothing sacrosanct about time limit so provided. It is not as if Act completely restricts transition of CENVAT credit in GST regime by particular date, and there is no rationale for curtailing said period, except under law of limitations. period of 90 days has no rationale and as noted above, extensions have been granted by Government from time to time, largely on account of its inefficient network. 18. In above noted circumstances, arbitrary classification, introduced by way of sub Rule (1A), restricting benefit only to taxpayers whose cases are covered by technical difficulties on common portal subject to recommendations of GST Council, is arbitrary, vague and unreasonable. What does phrase technical difficulty on common portal imply? There is no definition to this concept and respondent seems to contend that it should be restricted only to technical glitches on common portal . We, however, do not concur with this understanding. Technical difficulty is too broad term and cannot have narrow interpretation, or application. Further, technical difficulties cannot be restricted only to difficulty faced by or on part of respondent. It would include within its purview any such technical difficulties faced by taxpayers as well, W.P.(C) 11040/2018& connected matters Page 23 of 33 which could also be result of respondent s follies. After all, completely new system of accounting; reporting of turnover; claiming credit of prepaid taxes; and, payment of taxes was introduced with implementation of GST regime. basket of Central and State taxes were merged into single tax. New forms were introduced and, as aforesaid, all of them were not even operationalised. Just like respondents, even taxpayers required time to adapt to new systems, which was introduced as completely online system. Apart from shortcomings in system developed by GSTN Ltd., assessees also faced challenges posed by low bandwidth and lack of computer knowledge and skill to operate system. It is very unfair on part of respondents, in these circumstances, to expect that taxpayers should have been fully geared to deal with new system on day-one, when they themselves were completely ill-prepared, which led to creation of complete mess. respondents cannot adopt different standards one for themselves, and another for taxpayers. GST regime heralded system of seamless input tax credits. successful migration to new system was formidable and unprecedented task. fractures in system, after its launch, became visible as taxpayers started logging in closer to deadline. They encountered trouble filing returns. Petitioners who are large and mega corporations - despite aid of experts in field, could not collate humongous data required for submission of statutory forms. Courts cannot be oblivious to fact that large population of this country does not have access to Internet and filing of TRAN-1 was entirely shifted to electronic means. Nodal Officers often reach to conclusion that there is no technical glitch as per their GST system laws, as there is no W.P.(C) 11040/2018& connected matters Page 24 of 33 information stored/logged that would indicate that taxpayers attempted to save/submit filing of Form GST TRAN-1. Thus, phrase technical difficulty is being given restrictive meaning which is supplied by GST system logs. Conscious of circumstances that are prevailing, we feel that taxpayers cannot be robbed of their valuable rights on unreasonable and unfounded basis of them not having filed TRAN-1 Form within 90 days, when civil rights can be enforced within period of three years from date of commencement of limitation under Limitation Act, 1963. 19. introduction of Sub rule (1A) in Rule 117 is patchwork solution that does not recognise entirety of situation. It sneaks in exception, without addressing situations taken note of by us. This exception, as worded, is artificial construction of technical difficulties, limiting it to those existing on common portal. It is unfair to create this distinction and restrict it to technical snags alone. In our view, there could be various different types of technical difficulties occurring on common portal which may not be solely on account of failure to upload form. access to GST portal could be hindered for myriad reasons, sometimes not resulting in creation of GST log-in record. Further, difficulties may also be offline, as result of several other restrictive factors. It would be erroneous approach to attach undue importance to concept of technical glitch only to that which occurs on GST Common portal, as pre-condition, for assesee/tax payer to be granted benefit of Sub- Rule (1A) of Rule 117. purpose for which Sub-Rule (1A) to Rule 117 has been introduced has to be understood in right perspective by focusing on purpose which it is intended to serve. purpose was to W.P.(C) 11040/2018& connected matters Page 25 of 33 save and protect rights of taxpayers to avail of CENVAT credit lying in their account. That objective should also serve other taxpayers, such as petitioners. approach of Government should be fair and reasonable. It cannot be arbitrary or discriminatory, if it has to pass muster of Article 14 of Constitution. government cannot turn blind eye, as if there were no errors on GSTN portal. It cannot adopt different yardsticks while evaluating conduct of taxpayers, and its own conduct, acts and omissions. extremely narrow interpretation that respondents seek to advance, of concept of technical difficulties , in order to avail benefit of Sub Rule (1A), is contrary to statutory mechanism built in transitory provisions of CGST Act. legislature has recognized such existing rights and has protected same by allowing migration thereof in new regime under aforesaid provision. In order to avail benefit, no restriction has been put under any provisions of Act in terms of time period for transition. time limit prescribed for availing input tax credit with respect to purchase of goods and services made in pre-GST regime, cannot be discriminatory and unreasonable. There has to be rationale forthcoming and, in absence thereof, it would be violative of Article 14 of Constitution. Further, we are also of view that CENVAT credit which stood accrued and vested is property of assessee, and is constitutional right under Article 300A of Constitution. same cannot be taken away merely by way of delegated legislation by framing rules, without there being any overarching provision in GST Act. We have, in our judgment in A.B. Pal Electricals (supra) emphasized that credit standing in favour of assessee is vested property right under Article 300A of Constitution W.P.(C) 11040/2018& connected matters Page 26 of 33 and cannot be taken away by prescribing time-limit for availing same. 20. Now, let us also examine case law relied upon by Respondents. We find that judgments cited by Mr. Amit Bansal are distinguishable on facts. In case of ALD Automotive Pvt. Ltd. vs. Commercial Tax Officer (supra)reference was made to judgment of Supreme Court in Godrej & Boyce Mfg. Co. (P) Ltd. v. CST, (1992) 3 SCC 624. relevant portion of judgment is extracted herein below: 34. input credit is in nature of benefit/concession extended to dealer under statutory scheme. concession can be received by beneficiary only as per scheme of statute. Reference is made to judgment of this Court in Godrej & Boyce Mfg. Co. (P) Ltd. v. CST [Godrej & Boyce Mfg. Co. (P) Ltd. v. CST, (1992) 3 SCC 624] . Rules 41 and 42 of Bombay Sales Tax Rules, 1959 provided for set- off of purchase tax. This Court held that rule-making authority can provide curtailment while extending concession. In para 9 of judgment, following has been laid down: (SCC pp. 631-32) 9. In law (apart from Rules 41 and 41-A) appellant has no legal right to claim set-off of purchase tax paid by him on his purchases within State from out of sales tax payable by him on sale of goods manufactured by him. It is only by virtue of said Rules which, as stated above, are conceived mainly in interest of public that he is entitled to such set-off. It is really concession and indulgence. More particularly, where manufactured goods are not sold within State of Maharashtra but are despatched to out-State branches and agents and sold there, no sales tax can be or is levied by State of Maharashtra. State of Maharashtra gets nothing in respect of such sales effected outside State. In respect of such sales, rule-making authority could well have denied benefit of set-off. But it chose to be W.P.(C) 11040/2018& connected matters Page 27 of 33 generous and has extended said benefit to such out-State sales as well, subject, however to deduction of one per cent of sale price of such goods sent out of State and sold there. We fail to understand how valid grievance can be made in respect of such deduction when very extension of benefit of set-off is itself boon or concession. It was open to rule-making authority to provide for small abridgement or curtailment while extending concession. Viewed from this angle, argument that providing for such deduction amounts to levy of tax either on purchases of raw material effected outside State or on sale of manufactured goods effected outside State of Maharashtra appears to be beside point and is unacceptable. So is argument about apportioning sale-price with reference to proportion in which raw material was purchased within and outside State. In said case, appellant-company was registered dealer under Tamil Nadu Value Added Tax Act, 2006 (Tamil Nadu VAT Act)who was engaged in business of leasing management of motor vehicles and resale of used motor vehicles. It claimed entitlement to input tax credit of amount paid on purchases made from registered dealer of motor vehicle as per Section 19(2) of Tamil Nadu VAT Act.As per Section 19(11), if dealer had not claimed input tax credit for particular month, dealer could claim input tax credit before end of financial year or before 90 days from date purchase, whichever was later. When petitioner filed its return for assessment year 2007-08 - for want of tax invoices, said input tax credit could not be claimed. Thereafter, he filed revised returns claiming input tax credit. This was disallowed by commercial tax officer, which was then assailed in writ petition before High Court. High Court set aside order confirming proposal W.P.(C) 11040/2018& connected matters Page 28 of 33 to disallow. matter reached before Apex court. Examining this controversy, Court made observations as noted in Para 32 above. In said case, input tax credit was not claimed and thus, in these circumstances, Court concluded that benefits envisaged in taxing statue has to be extended as per restrictions and conditions therein. Since statute did not give any indication w.r.t extension of time for claim of input tax credit, period could have been extended by authority. However, in instant cases, input tax credit had been claimed in erstwhile regime and was being reflected in CENVAT credit ledger. This credit, under Section 140(1), has to be carried forward and in that sense, vested right of property of petitioner stood accrued and same cannot be taken away by respondents by way of Rules. Likewise, judgment of Gujarat High Court in Willowood(supra) is also not relevant. Moreover, Punjab and Haryana High Court in Adfert Technologies Pvt. Ltd. vs. Union of India [CWP No. 30949/2018 (O&M) decided on 04.11.2019], took note of decision in Willowood (supra), and observed that Gujarat High Court itself, as well as this Court in subsequent judgements, has taken contrary view to that expressed in Willowood (supra) [Ref: Siddharth Enterprises v. Nodal Officer 2019- VIL-442-GUJ, JakapMetind Pvt Ltd v Union of India 2019-VIL-556-GUJ and Indsur Global Ltd. v. Union of India 2014 (310) E.L.T. 833 (Gujarat)].The Court therefore, proceeded to grant relief by permitting taxpayer to file TRAN-1 Form electronically and manually beyond stipulated date. We have been further informed that decision of Punjab and Haryana High Court was assailed before Apex Court by Revenue in SLP 4408/2020 and , same has resulted in dismissal by W.P.(C) 11040/2018& connected matters Page 29 of 33 order dated 28.02.2020. Even otherwise, observations made in Willowood (supra) have to be read in light of fact that time limit for filing TRAN-1 has been extended multiple times and implementation of GST regime and transition thereto has been inefficient and rough. 21. Lastly, we also find merit in submissions of petitioners that Rule 117, whereby mechanism for availing credits has been prescribed, is procedural and directory, and cannot affect substantive right of registered taxpayer to avail of existing / accrued and vested CENVAT credit. procedure could not run contrary to substantive right vested under sub Section (1) of Section 140. While interpreting Order VIII Rule 1 CPC, Supreme Court has observed that time limit for filing written statement is directory in nature and not mandatory, and that procedural law is not to be tyrant but servant, not obstruction but aid to justice [Ref: Salem Advocates Bar Association v. Union of India AIR 2003 SC 189]. Reference may also be made to Commissioner of Central Excise, Madras v Home Ashok Leyland (2007) 4 SCC 41, wherein it was observed that Rule 57E of Central Excise Rules, 1944 was procedural provision, which provides procedure for adjustment of MODVAT credit available to taxpayer and, hence, right available under substantive provision cannot be deprived for non-compliance with procedural provision. There is no consequence provided in Rule 117 of GST Rules on account of failure to file GST TRAN-1. argument of respondents is that consequence is provided in Sub-Section (1) of Section 140 by way of pre-condition for being entitled to transit CENVAT credit in his W.P.(C) 11040/2018& connected matters Page 30 of 33 electronic credit register under GST regime. We do not agree. Section 140 (1) is categorical. It states that registered person shall be entitled to take, in his electronic credit ledger, amount of CENVAT credit carried forward in return relating to period ending with day immediately preceding appointed day . . Only manner i.e. procedure of carrying forward was left to be provided by use of words in such manner as may be prescribed . limitation on right to carry forward CENVAT credit is substantively provided by proviso to said section. Those are only limitations on said statutory right. Under garb of framing Rules which are subordinate legislation, width of those limitations could not have been expanded as is sought to be done by introduction of Rule (1A). In absence of any consequence being provided under Section 140, to delayed filing of TRAN-1 Form, Rule 117 has to be read and understood as directory and not mandatory. Further, even in ALD Automotive Pvt. Ltd. v Commercial Tax Officer(2019) 13 SCC 225, while dealing with question of whether provision prescribing time limit for claim of Input Tax Credit is directory or mandatory in nature, it was observed that whether particular provision is mandatory or directory has to be determined on basis of object of particular provision and design of statute and such interpretation should not be put which may promote public mischief and cause public inconvenience and defeat main object of statute . Therefore, in present cases, purport of transitory provisions is to allow smooth migration from erstwhile service tax regime to new GST regime and interpretation must be in consonance with said purpose. W.P.(C) 11040/2018& connected matters Page 31 of 33 22. We, therefore, have no hesitation in reading down said provision [ Rule 117] as being directory in nature, insofar as it prescribes time-limit for transitioning of credit and therefore, same would not result in forfeiture of rights, in case credit is not availed within period prescribed. This however, does not mean that availing of CENVAT credit can be in perpetuity. Transitory provisions, as word indicates, have to be given its due meaning. Transition from pre-GST Regime to GST Regime has not been smooth and therefore, what was reasonable in ideal circumstances is not in current situation. In absence of any specific provisions under Act, we would have to hold that in terms of residuary provisions of Limitation Act, period of three years should be guiding principle and thus period of three years from appointed date would be maximum period for availing of such credit. 23. Accordingly, since all Petitioners have filed or attempted to file Form TRAN-1 within aforesaid period of three years they shall be entitled to avail Input Tax Credit accruing to them. They are thus, permitted to file relevant TRAN-1 Form on or before 30.06.2020. Respondents are directed to either open online portal so as to enable Petitioners to file declaration TRAN-1 electronically, or to accept same manually. Respondents shall thereafterprocess claims in accordance with law. We are also of opinion that other taxpayers who are similarly situated should also be entitled to avail benefit of this judgment. Therefore, Respondents are directed to publicise this judgment widely including by way of publishing same on their website so that others who may not have been able to file TRAN-1 till date are permitted to do so on or W.P.(C) 11040/2018& connected matters Page 32 of 33 before 30.06.2020. 24. All petitions are allowed in above terms. SANJEEV NARULA, J VIPIN SANGHI, J MAY 05, 2020 v W.P.(C) 11040/2018& connected matters Page 33 of 33 Brand Equity Treaties Limited v. Union of India & Or