Heritage Lifestyles and Developers and Private Limited v. The Union of India / Central Board of Indirect Taxes and Customs / State of Maharashtra / Goods and Service Tax Council / Deputy Commissioner of CGST & Central Excise Division-I,Range–III, Navi Mumb
[Citation -2020-LL-1105-50]

Citation 2020-LL-1105-50
Appellant Name Heritage Lifestyles and Developers and Private Limited
Respondent Name The Union of India / Central Board of Indirect Taxes and Customs / State of Maharashtra / Goods and Service Tax Council / Deputy Commissioner of CGST & Central Excise Division-I,Range–III, Navi Mumb
Court HIGH COURT OF BOMBAY
Relevant Act CGST
Date of Order 05/11/2020
Judgment View Judgment
Keyword Tags goods and services tax • technical grounds • due verification • cenvat credit • ultra vires • tax credit • input tax credit


WP (ST) 3705 of 2020.odt IN HIGH COURT OF JUDICATURE AT BOMBAY CIVIL APPELLATE JURISDICTION WRIT PETITION (ST.) NO.3705 OF 2020 Heritage Lifestyles and Developers Petitioner and Private Limited Company incorporated under Companies Act, 1956 having its office at Plot No. 29, D.K. Sandhu Marg, Opposite Sai Baba temple, Chembur, Mumbai 400 071 through its Authorized Representative Ms. Gayatri Gor. Versus 1. Union of India through Respondents Revenue Secretary Ministry of Finance Department of Revenue North Block New Delhi 110 001. 2. Central Board of Indirect Taxes and Customs Ministry of Finance North Block New Delhi 110 001. 3. State of Maharashtra Through Secretary Ministry of Finance Department of Revenue, Mantralaya Mumbai 400 001. 4. Goods and Service Tax Council GST Council Secretariat 5th Floor, Tower II, Jeevan Bharti Building, Janpath Road, Seema 1/17 WP (ST) 3705 of 2020.odt Connaught Place, New Delhi 110 001. 5. Deputy Commissioner of CGST & Central Excise Division-I, Range III Navi Mumbai, 16th Floor, Satra Plaza, Sector 19D, Palm Beach Road Vashi, Navi Mumbai 400 705. 6. Superintendent (Computers) CGST & Central Excise Navi Mumbai 16th Floor, Satra Plaza, Sector 19D, Palm Beach Road Vashi, Navi Mumbai 400 705. 7. Superintendent of CGST & Central Excise, Range-III Division-I, Navi Mumbai, 16th Floor, Satra Plaza, Sector 19D, Palm Beach Road Vashi, Navi Mumbai 400 705. 8. Deputy Commissioner of GST & Central Excise, Mumbai Zone 115, New Central Excise Building M. K. Road, Churchgate Mumbai 400 020. 9. Commissioner of CGST & Central Excise, Navi Mumbai, 16th Floor, Satra Plaza, Sector 19D, Palm Beach Road Vashi, Navi Mumbai 400 705 10. Chief Commissioner of GST & Central Excise, Mumbai Zone Seema 2/17 WP (ST) 3705 of 2020.odt 115, New Central Excise Building M. K. Road, Churchgate Mumbai 400 020. 11. Commissioner of State Tax, GST Bhavan, Mazgaon, Mumbai ---------- Mr. Bharat Raichandani i/b M/s UBR Legal - Advocate for Petitioner. Mr. Pradeep S. Jetly, Senior Advocate with Mr. Jitendra Mishra -Advocates for Respondent Nos. 1,2 and 4 to 10. ---------- CORAM : UJJAL BHUYAN AND ABHAY AHUJA, JJ. RESERVED ON : 29thOCTOBER,2020. PRONOUNCED ON : 5th NOVEMBER, 2020. (THROUGH VIDEO CONFERENCING) ORDER (PER ABHAY AHUJA) : 1. Heard. Rule. Rule made returnable forthwith. By consent of Counsel for parties, matter is taken up for final hearing. 2. Being aggrieved and dissatisfied by inaction on part of Respondent authorities in not giving Seema 3/17 WP (ST) 3705 of 2020.odt Input tax credit to claim of Petitioner pursuant to Board Circular No. 39/13/2018-GST dated 3 rd April, 2018, Petitioner has sought to not only challenge said inaction but also to challenge vires of Rule 117 and Rule 118 of Central Goods and Service Tax Rules, 2017 as null and void and ultra vires Section 140 (1), Section 140 (3) and Section 9 of Central Goods and Services Tax Act, 2017 and Article 14, 19, 246, 248, 265, 268A, 286 and 302 read with entry 41 and 83 of list 1 of Schedule VII of Constitution of India and as also being beyond legislative competence of Parliament under Article 269-A of Constitution of India and has prayed for following reliefs:- (a) that this Hon'ble Court may be pleased to issue Any writ, order or direction more particularly in nature of Writ of Declaration to declare Rule 117 and Rule 118 of Central Goods and Service Tax rules 2017 as null, void and ultra vires of Section 140(1), Section 140(3) and Section 9 of Central Goods and Service tax Act 2017 and Article 14, 19, 246, 248, 265, 268A, 286 and 302 read with Entry 41 and 83 of List 1 of VII Schedule of Constitution of India and as also being beyond legislative competence of Parliament under Article 269A of Seema 4/17 WP (ST) 3705 of 2020.odt Constitution of India in so far as it is impugned and pass such further or other orders as this Hon'ble Court may deem fit and necessary in facts and circumstance of case and thus render justice; (b) that this Hon'ble Court be pleased to issue Writ of Certiorari or writ in nature of Certiorari or any other writ, order or direction under Article 226 of Constitution of India calling for records pertaining to Petitioner's case and after going into validity and legality of provisions, direct Respondents to pass such directions to allow petitioner to file Tran-1 electronically and carry forward eligible cenvat credit in electronic credit ledger/ Input tax credit account; (c) that this Hon'ble Court be pleased to issue writ of mandamus or any other writ in nature of Certiorari or any other writ, order or direction under Article 226 of Constitution of India calling for records pertaining to Petitioner case and direct Respondents to either accept copy of TRAN-1 in physical form and give Seema 5/17 WP (ST) 3705 of 2020.odt due credit from back end or allow to file declaration under TRAN-1 electronically and reflect said input tax credit in electronic credit ledger / input tax credit account. 3. It is submitted that Petitioner is Private limited company, inter-alia engaged in business of construction and development of real estate for purpose of sale to prospective buyers and is registered as dealer under provisions of Maharashtra Value Added Tax Act, 2002 (the MVAT Act ) as well as registered under provisions of Central Goods and Services Tax Act, 2017 ( CGST Act ) as service provider and also as registered dealer . 4. It is submitted that under pre-GST regime, Petitioner was paying Service tax on services and filing returns. It was therefore availing credit/set off of service tax paid on input service. Under pre-GST regime, Petitioner was also paying MVAT on sale of goods, filing returns and also availing credit/set off of MVAT. 5. Post introduction of CGST Act, 2017 with effect from 01.07.2017, pursuant to transitional provisions Seema 6/17 WP (ST) 3705 of 2020.odt contained in Chapter XX of CGST Act, 2017 as well as under Chapter XX of Maharashtra Goods and Services Tax Act, 2017 ( MGST Act ), Petitioner was entitled to carry forward Input tax credit as on 30.06.2017 in TRAN-1 form for period from 01.07.2016 to 30.06.2017 totaling amount of Rs. 79,44,237.61/-, under Section 140 of CGST Act read with Rule 117 of CGST Rules and Rule 118 of MGST Rules. 6. Petitioner submits that Section 140 of CGST Act read with Rule 117 of CGST Rules requires migrated registered supplier to file declaration (in electronic form) under form TRAN 1 intimating/disclosing details of CENVAT credit of tax paid on inputs, capital goods, input services in order to carry forward same to electronic credit ledger/input tax credit account under CGST Act, 2017. declaration/form was required to be filed within period of 90 days from appointed date i.e. 01.07.2017, which time limits were extended to 27.12.2017, then to 31.03.2019 and finally to 31.12.2019. It is submitted that said form TRAN 1 was notified in August, 2017 and online functionality to file said form was deployed on GST portal only on 21.08.2017. Seema 7/17 WP (ST) 3705 of 2020.odt 7. It is submitted that Petitioner could not file TRAN 1 by 27.12.2017 due to lack of awareness of procedures, technical glitches, GST being new and complex system to operate. Petitioner has annexed screenshot being Exhibit-H to Petition to demonstrate technical glitches. 8. It is submitted by Petitioner that upon inquiry about form TRAN 1, Petitioner was assured that sufficient time would be provided and further extension beyond 27th December, 2017 would be granted as there were lots of other extensions taking place in implementation of various modules/forms of GST. 9. Petitioner then wrote letter dated 7.5.2018 to Respondent No. 5 informing latter that it was unable to fill up and file TRAN 1 form within appointed due time. Petitioner also drew attention of Respondent No. 5 towards CBIC Circular dated 3.4.2018, wherein opportunity to file TRAN-1 was given to all assessees who were unable to file TRAN-1 due to technical difficulties and to make application for redressal of grievances. By said letter, Petitioner provided details as per Circular No. 39/13/2018-GST dated Seema 8/17 WP (ST) 3705 of 2020.odt 03.04.2018 and requested Respondent No. 5 to redress its grievances. 10. It is submitted that vide letter dated 18.05.2018, Respondent No. 7 requested Petitioner for documents/information which were provided to said Respondent vide letters dated 18.05.2018 and 21.05.2018. 11. It is case of Petitioner that vide letter dated 24.05.2018, Respondent No. 7 after due verification of claim of Petitioner relating to CENVAT Credit/ITC forwarded application for further disposal to Respondent No. 8 inter-alia stating that application has been filed by tax payer on 7.5.2018, which was within stipulated date i.e. 10.05.2018 as extended by Bombay High Court. 12. It is submitted that vide E-mail dated 18.09.2018, Respondent No. 5 wrote to GSTN Nodal Officer seeking to know status of application. 13. Further by letter dated 25.09.2018, Petitioner wrote letter to Respondent No. 9 stating that since it Seema 9/17 WP (ST) 3705 of 2020.odt was unable to file TRAN-1 due to technical glitches it had submitted TRAN-1 manually for verification and requested Respondent No. 9 to activate TRAN-1 portal to enable Petitioner to file TRAN-1 electronically and to claim credit in electronic credit ledger. 14. Vide letters dated 11.12.2018, 12.12.2018 and 31.03.2019, Petitioner sent reminders to Respondents with respect to its application made pursuant to CBIC circular dated 3.04.2018. 15. Petitioner submits that since Petitioner has not received any clarity from Respondents with regard to carry forward of CENVAT credit in respect of its application, it has been left with no option but to file present Petition as result of hardship caused to Petitioner. Petitioner has also raised grounds challenging vires of Rule 117 and Rule 118 of CGST Rules as ultra vires Sections 140 (1), 140 (3) and Section 9 of CGST Act as well as ultra vires Constitution of India as mentioned above. 16. Respondents have filed reply submitting that issue involved in Petition is no more res-integra and is covered by Judgment dated 20.03.2020 passed Seema 10/17 WP (ST) 3705 of 2020.odt by this Court in case of NELCO Limited V/s Union of India and Ors. (Writ Petition No. 6998 of 2018). It is submitted that Petitioner s application for manual GST TRAN-1 dated 7.5.2018 pursuant to Board Circular No 39/13/2018-GST dated 3rd April, 2018 was sent for verification to Additional Commissioner, Nodal Officer IT Grievance Redressal (ITGRC) Mechanism , CCO, CGST and Central Excise, Mumbai Zone for further action. However, Petitioner s application was not approved by ITGRC under category description Tax Payer has neither tried for saving/submitting or filing TRAN-1 . 17. In affidavit-in-reply it has also been stated that though Petitioner was found to be eligible for credit amounting to Rs. 78,62,466/-, it was denied by ITGRC as there was no log of such attempt made by it. 17.1. Petitioner has filed affidavit in rejoinder stating that NELCO decision (Supra) is not applicable to facts of present case as same are distinguishable on facts. 18. Mr. Raichandani, learned counsel for Petitioner has specifically drawn our attention to Exh. N to Writ Petition being communication dated 24.5.2018 to Seema 11/17 WP (ST) 3705 of 2020.odt submit that application of Petitioner for manual GST TRAN-1 in terms of said circular dated 3.4.2018 which has been filed within time has been verified by jurisdictional office. He would submit that when Respondents themselves have verified input tax credit due to Petitioner and when Respondents themselves have found that Petitioner is eligible for credit amounting to Rs. 78,62,466/-, then technicality raised by ITGRC cannot deprive Petitioner of due credit in its credit ledger and prays that this Petition be accordingly allowed. Learned counsel for Petitioner has relied upon Supreme Court decision in case of Mangalore Chemicals and Fertilizers Ltd. Vs. Deputy Commissioner [1991 (55) ELT 437 (SC)]. 19. On other hand, Mr. Jetley, learned counsel for Respondents would submit that said circular has been issued only to address difficulties due to technical glitches on GST Portal in respect of tax payers who were not able to complete TRAN-1 procedure before 27.12.2019 which is not case of Petitioner here. He reiterates that in fact ITGRC has clearly denied eligibility of input tax credit to Petitioner on ground that tax payer has neither tried for saving/submitting or filing TRAN-1. Seema 12/17 WP (ST) 3705 of 2020.odt 20. We have heard learned counsel Shri Bharat Raichandani for Petitioner and Shri Pradeep Jetley alongwith Shri J. B. Mishra for Respondents. We have also perused papers and proceedings in this Petition. 21. This is case, where admittedly Petitioner could not file GST TRAN-1 on or before 27.12.2017 but had manually applied for GST TRAN-1 on 7.5.2018 as per Circular dated 03.04.2018 within timeline as per date extended by this Court. Also admittedly Respondents have found Petitioner to be eligible for credit amounting to Rs. 78,62,466/-. But credit for same has been denied as ITGRC found that Petitioner has not tried to save or submit or file TRAN-1 before 27.12.2017. We are informed by learned counsel for Petitioner which is not controverted by learned Sr. counsel for Respondents that this information of rejection of Petitioner s application for manual GST TRAN-1 has not been communicated to Petitioner despite several reminders/ communications from Petitioner and it is only by way of affidavit in reply filed to this Petition that Petitioner has become aware of rejection. Seema 13/17 WP (ST) 3705 of 2020.odt 22. Be that as it may, it is true that above circular has been issued keeping in mind cases where difficulties have been faced by section of tax payers owing to technical glitches on GST Portal. However, facts of this case are peculiar in as much as respondents themselves admitted that Petitioner is eligible for input tax credit but have rejected claim because ITGRC has not approved it saying that tax payer has neither tried for saving/submitting or filing TRAN-1. There is no further explanation or clarification on this issue by Respondents except to state ITGRC description viz. tax payer has neither tried for saving/submitting or filing TRAN- 1 . Therefore it would be not necessary for us to even deal with Circular under which application for manual TRAN-1 has been made. When there is no dispute to fact that Petitioner is otherwise eligible for credit of Rs. 78,62,466/- then to deny benefit of such Input credit merely on technical grounds cannot be justified. Merely on technical ground admitted input credit is sought to be denied to Petitioner. That according to us would be wholly unfair and travesty of justice. It is in these facts and circumstances that we are compelled to invoke our writ jurisdiction in this case. Seema 14/17 WP (ST) 3705 of 2020.odt 23. In this context, we would like to refer to Supreme Court decision in case of Mangalore Chemicals and Fertilizers Ltd. Vs. Deputy Commissioner (Supra). That was case where there was no dispute that appellant was entitled to benefit of exemption under notification dated 30.06.1969 nor there was dispute that refunds were eligible to adjusted against sales tax payable for respective years, but only controversy was whether appellant not having actually secured prior permission would be entitled to adjustment having regard to words of notification of 11 th August 1975, that until permission of renewal is granted by Deputy Commissioner of Commercial Taxes, new industry should not be allowed to adjust refunds. Hon ble Supreme Court aptly summarized contention as under :- contention virtually means this : No doubt you were eligible and entitled to make adjustments. There was also no impediment in law to grant you such permission. But see language of Clause 5. Since we did not give you permission you cannot be permitted to adjust Is this effect of law? 24. After considering arguments of counsel and after considering its own decisions in various cases Seema 15/17 WP (ST) 3705 of 2020.odt including decision in case of Kedarnath Jute Manufacturing Co. V/s. Commissioner of Income Tax, Supreme Court allowed appeal while quoting Lord Denning [in case of Wells Vs. Minister of Housing and Local Government: 1967 (1) WLR 1000 ] as under : Now I know that Public Authority cannot be estopped from doing its public duty, but I do think it can be estopped from relying upon technicality and this is technicality . 25. Supreme Court also quoted Francis Bennion in his Statutory Interpretation , 1984 edition at page 683 as under: Unnecessary technicality : Modern Courts seek to cut down technicalities attendant upon statutory procedure where these cannot be shown to be necessary to fulfillment of purposes of legislation. 26. above decision and particularly above quotes to our mind aptly describe situation at hand. 27. In view of our above discussion, as admittedly in this case Respondents have found Petitioner to be eligible for input credit amounting to Rs. 78,62,466/-, Seema 16/17 WP (ST) 3705 of 2020.odt in our view finding of ITGRC would in face of admission by Respondents to amount of credit, would be mere technicality which cannot come in way of substantial justice. 28. Accordingly, we direct Respondents to accept TRAN-1 filed by Petitioner and to give due of input tax credit of Rs. 78,62,466/- in electronic credit ledger/input tax credit of Petitioner within two weeks from date of this order. 29. In view of our above order, we do not consider it necessary to examine Petitioner s challenge to vires of Rules 117 and 118 of Central Goods and Services Tax Rules, 2017. 30. Petition is accordingly allowed in above terms. However, there shall be no order as to costs. 31. This order will be digitally signed by Personal Assistant of this Court. Associate of this Court is permitted to forward parties copy of this order by e- mail. All concerned to act on digitally signed copy of this order. Digitally Smita signed by Smita R. Joshi [ABHAY AHUJA, J.] [UJJAL BHUYAN, J.] R. Date: 2020.11.05 Joshi 16:16:51 +0530 Seema 17/17 Heritage Lifestyles and Developers and Private Limited v. Union of India / Central Board of Indirect Taxes and Customs / State of Maharashtra / Goods and Service Tax Council / Deputy Commissioner of CGST & Central Excise Division-I,RangeIII, Navi
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