FIle Trans -01 before June 30, 2020.

This is in relation to recent pronouncement of Hon’ble Delhi High Court in case of Reliance Elektrik Works vs. UOI; W.P. (C) 13203/2019 wherein it has been held that, all the tax payers can file FORM TRAN-1 within the period of 3 years from the appointed date (i.e., by 30th June 2020).

 

Brief Facts:-

 

Since the inception of Goods and Services Tax (GST), the restrictive transitional provisions, deadlines and the inefficiency of the GST portal have caused enough loss of input tax credit (ITC) to the taxpayers. Various High Courts, in plethora of cases, have provided relief to the petitioners aggrieved, by the inability of the software to file GST FORM TRAN-1 within the prescribed limitation period. Yet, there are large number of the taxpayers incurring the loss of ITC because of inability and lack of infrastructure to invoke litigation for this cause. 

 

The petitioners, in the aforementioned writ petition, sought relief to permit the filing of FORM TRAN-1 beyond the period provided under the Central GST Rules, 2017 (CGST Rules), which was not filed because of technical inability and procedural frustration, in as much as, such provisions of CGST Rules, restricting the transition of Credit, and the provisions of Rule 117 of the CGST Act, are arbitrary, unconstitutional and violative of Article 14 of the Indian Constitution. 

 

Decision:

 

The Hon’ble Delhi High Court has held that, accrued and vested rights of the taxpayers cannot be curtailed by a subordinate legislation. As such, the limitation of 90 days was extended by the Government from time to time, largely on account of inefficient network. Several parties have already been served with the relief by various High Courts. Which means that the substantive right should not be curtailed but extended to the public at large. Therefore, the Hon’ble Court has held that, the provisions of CGST Rules being directory in nature, and in absence of any specific provisions under the CGST Act, the residuary provision of Limitation Act should be the guiding principle, which is 3 years from the appointed date of 30.06.2017.

 

The Court has further directed the Department to allow all assessees to claim input tax credit in FORM TRAN-1 by 30.06.2020. Further, the said judgment will be applicable to all the taxpayers irrespective of whether they have approached the Court or not.  The Court has further directed to publicise this judgment by way of publishing the same on their website so that all taxpayers can file the same by on or before 30.06.2020.

 

Comments:

 

This judgment will have a significant impact on large number of taxpayers who could not file FORM TRAN-1, due to any reason, as it is a substantial relief to them. Now, department should come up with some guidelines/instruction so that tax payers can file the same within time prescribed by the Hon’ble Court.