Rajasthan HC denies Transitional Credit due to Non-Attempt to File GST TRAN-1 [Read Order]

While rejecting the petition filed by Shree Motors, the Rajasthan High Court has denied transitional credit due to non-attempt to file GST Tran-1.

The petitioners had purchased goods prior to the appointed date, 01.07.2017, which were held in stock on the appointed date. The CGST Act provides for transitional provision for the transition of credit for a registered person as he is entitled to take credit for eligible duties in respect of input held in stock on the appointed day. Rule 117 of the Central Goods and Service Tax Rules, 2017 was framed for allowing carry forward of the eligible duties available with the assessee on the day immediately preceding 01.07.2017, which imposed a time limit of 90 days for taking credit of eligible duties in electronic credit ledger.

It was alleged that due to various technical glitches/system error the petitioners have failed to file Form GST Tran-1 at common portal within the time envisaged under Rule 117 of the CGST Rules. After attempting help at the GST network portal, the petitioners approached the department for manually accepting the Form GST Tran-1 and made several attempts in this regard but failed to obtain a response.

The learned counsel for the respondent contended that after going through the log, there was no evidence of error or submission/filing of Form GST Tran-1 by the petitioners, the petitioners on account of alleged vested right cannot seek the relaxation in the limitation and reopening of the portal for the purpose. Allegations made about the technical glitches and that the assesses were generally denied the credit on account of such glitches is baseless as a huge number of Form GST Tran-1 were filed and transitional credit was given. As there was no evidence of error or submission/filing of Form GST Tran-1 by the petitioners, the court ruled that they were not entitled to any relief.

Justice Arun Bhansali observed that  “The theory of vested rights and the implication of limitation on the said aspect of the vested right has been considered by Hon’ble Supreme Court in the case of Osram Surya (P) Ltd.,  wherein, while considering the proviso II to Rule 57G of the Act of 1944 it was laid down that by providing limitation the statute has not taken away any of the vested rights, which accrue to the manufacturers and what is restricted is the time, within which, the manufacturer has to enforce that right and, therefore, once the provisions of Rule 117 of the CGST Rules, which prescribe limitation has been upheld, the plea raised pertaining to the denial of vested right on account of petitioners failing to submit/file Form GST Tran-1 in time cannot be countenanced”.