CWP No.8213 of 2020(O&M) IN HIGH COURT OF PUNJAB & HARYANA AT CHANDIGARH. CWP No.8213 of 2020(O&M) Date of Decision:-18.06.2020 Amba Industrial Corporation. ......Petitioner. Versus Union of India & Anr. ......Respondents. CORAM:- HON'BLE MR. JUSTICE JASWANT SINGH HON'BLE MR. JUSTICE SANT PARKASH Present:- Mr. Deepak Gupta, Advocate for Petitioner. *** JASWANT SINGH, J. Hearing conducted through Video Conferencing. 1. Petitioner through instant petition is challenging vires of Rule 117(1A) of Central Goods and Service Tax Act, 2017 (for short Rules ) and seeking direction to Respondent to permit Petitioner to electronically upload form TRAN-I or avail input tax credit (for short ITC ) in monthly return GSTR-3B. 2. Petitioner-a partnership firm, engaged in business of trading of S.S. Flats, is registered with Respondent-GST Authorities under Central Goods and Services Tax Act, 2017 (for short CGST Act ). Petitioner prior to 01.07.2017 i.e. date of introduction of GST was registered under Central Excise Act, 1944 as dealer/trader. Petitioner purchased S.S. Flats and Scrap on payment of Excise Duty amounting to 1 of 7 ::: Downloaded on - 30-04-2021 10:14:23 ::: CWP No.8213 of 2020(O&M) #2# Rs.10,36,201/-. Petitioner to carry forward unutilized CENVAT Credit, in terms of Section 140 of CGST Act read with Rule 117 (1) was required to upload TRAN-I on official portal of Respondent, however Petitioner failed to upload TRAN-I by last date i.e. 27.12.2017. As per sub-Rule (1A) of Rule 117 of Rules, Commissioner on recommendation of Council may extend date for submitting declaration, in respect of registered persons who could not submit declaration by due date on account of technical difficulties. Respondents in exercise of power conferred by sub-Rule (1A) of Rule 117 of Rules, by order dated 07.02.2020 (Annexure P-3) has extended date for filing TRAN-I till 31.03.2020. 3. Counsel for Petitioner contended that issue involved is squarely covered by judgment of this Court in case of Adfert Technologies Pvt. Ltd. Vs Union of India 2019-TIOL-2519-HC-P&H- GST. SLP filed against aforesaid decision stands dismissed. Delhi High Court in case of Brand Equity Treaties Ltd. and others vs. Union of India 2020-TIOL-900-HC-Del-GST following decision of this Court and various other High Courts has permitted Petitioners to file TRAN-I on or before 30.06.2020. Delhi High Court has further directed Respondents to permit all other similarly situated tax payers to file TRAN-I on or before 30.06.2020. Delhi High Court has further vide order dated 16.06.2020 in SKH Sheet Metals Components vs. Union of India WP(C) 13151 of 2019 approved its earlier opinion in case of Brand Equity and permitted Petitioners to file TRAN-I till 30.06.2020. 4. Notice of motion. 5. Mr. Satya Pal Jain, Additional Solicitor General assisted by Mr. 2 of 7 ::: Downloaded on - 30-04-2021 10:14:24 ::: CWP No.8213 of 2020(O&M) #3# Dheeraj Jain, Advocate accepts notice on behalf of respondent no.1 while Mr. Sharan Sethi, Senior Standing Counsel accepts notice for respondent no.2-Commissioner of Central Goods & Services Tax. They are unable to controvert fact that issue in hand is squarely covered by judgment of this Court in Adfert Technologies Pvt. Ltd. (Supra) and of Delhi High Court in case of Brand Equity (Supra). 6. Having heard learned Counsel for parties and perused cited judgments, we are of considered opinion that issue involved is squarely covered by judgments of this Court as well as of aforesaid judgments of Delhi High Court. 7. Division Bench of this Court consisting one of us (Jaswant Singh J) vide order dated 4.11.2019 allowed bunch of petitions which included CWP No. 30949 of 2018 titled as Adfert Technologies Pvt. Ltd. Vs Union of India. revenue assailing decision of this court filed SLP before Hon ble Supreme Court which stands dismissed vide order dated 28.02.2020. Following opinion in Adfert Technologies (Supra) number of writ petitions involving identical question have been disposed of by this Court, wherein Respondents have been directed to open portal so that assessee may upload TRAN-I and in case Respondent fails to open portal, Petitioners have been permitted to take ITC in monthly return GSTR-3B. Division Bench of Delhi High Court in case of SKH Sheet Metals Components vs. Union of India WP(C) 13151 of 2019, vide order dated 16.06.2020 has permitted Petitioner to revise TRAN-I on or before 30.06.2020. Delhi High Court while passing aforesaid order has relied upon its recent decision in Brand Equity Treaties Ltd. and others vs. Union of India (Supra) wherein Court had held that Government cannot adopt 3 of 7 ::: Downloaded on - 30-04-2021 10:14:24 ::: CWP No.8213 of 2020(O&M) #4# different yardsticks while evaluating conduct of tax payers and its own conduct, acts and omissions. It would be profitable to extract relevant paragraphs of judgment of Delhi High Court in Brand Equity: 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, 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 4 of 7 ::: Downloaded on - 30-04-2021 10:14:24 ::: CWP No.8213 of 2020(O&M) #5# 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 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 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 5 of 7 ::: Downloaded on - 30-04-2021 10:14:24 ::: CWP No.8213 of 2020(O&M) #6# 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 and cannot be taken away by prescribing time-limit for availing same. Emphasis Supplied In above findings, Delhi High Court though has not declared Rule 117 (1A) ultra vires constitution, nonetheless treated as violative of Article 14 of Constitution of India being arbitrary, discriminatory and unreasonable. 8. Petitioner has challenged vires of Rule 117 (1A) of Rules, however we do not think it appropriate to declare it invalid as we are of considered opinion that Petitioner is entitled to carry forward Cenvat Credit accrued under Central Excise Act, 1944. Respondents have repeatedly 6 of 7 ::: Downloaded on - 30-04-2021 10:14:24 ::: CWP No.8213 of 2020(O&M) #7# extended date to file TRAN-I where there was technical glitch as per their understanding. Repeated extensions of last date to file TRAN-I in case of technical glitches as understood by Respondent vindicate claim of Petitioner that denial of unutilized credit to those dealers who are unable to furnish evidence of attempt to upload TRAN-I would amount to violation of Article 14 as well Article 300A of Constitution of India. 9. In view of decision of this Court in case of Adfert Technologies Pvt. Ltd. (Supra) and Delhi High Court in case of Brand Equity Treaties Ltd. (Supra) present petition deserves to be allowed and accordingly allowed. Respondents are directed to permit Petitioner to upload TRAN-I on or before 30.06.2020 and in case Respondent fails to do so, Petitioner would be at liberty to avail ITC in question in GSTR-3B of July 2020. No doubt, respondents would be at liberty to verify genuineness of claim(s) made by Petitioner. ( JASWANT SINGH ) JUDGE ( SANT PARKASH ) JUDGE June 18, 2020 Vinay Whether speaking/reasoned Yes/No Whether Reportable Yes/No 7 of 7 ::: Downloaded on - 30-04-2021 10:14:24 ::: Amba Industrial Corporation v. Union of India & Anr