HC ALLOWS TRAN-1 AFTER DUE DATE CHALLENGED BEFORE SC

UNION OF INDIA VS. ARORA AND COMPANY

[SPECIAL LEAVE PETITIONER (CIVIL) DIARY NO(S). 5154/2020]

The petitioner is engaged in the trading of the steel pipes. He was entitled to claim the credit of excise duty available to him in the pre-GST regime and for that he was required to file Form TRAN-1 within 90 days. But, due to the technical glitches faced by the taxpayers on the common portal, the time limit for availing the transitional credit was extended again and again and ended up to December 27, 2017.

However, the petitioner was unable to log in to the common portal between the period from December 24 to December 27, 2017, owing to the low bandwidth.

Reliance is placed upon Circular No. 39/13/2018-GST dated April 3, 2018, wherein the grievances of the taxpayers is that they could not file the declaration due to technical glitches on GST Portal. Further, he had submitted that the authorities had retracted the approval granted for filing form TRAN-1 by March 31, 2019.

The Hon'ble Delhi HC has observed that the nature of the relief sought by the petitioner is covered by the decision passed in the case of Blue Bird Pure Private Limited. Accordingly, the Court had directed the department to either open the online portal to enable the petitioner to file the Form TRAN-1 electronically or to accept the same manually on or before 20.11.2019.

Aggrieved by the decision of Delhi HC, the authorities had challenged the same before the Apex Court. 

MAG Comments:

Recently, the judgment passed by the Hon'ble Delhi HC in the case of Brand Equity Treaties Limited [WP (C) 11040/2018] had roused the controversy regarding the claim of transitional credit by holding that the time-limit prescribed for transitional credit is 'directory', not mandatory. However, as the Apex Court has stayed the said judgment, but the matter is still unsettled and would be winded up only with a precise and explicit decision of SC.

It is pertinent to note here that the Hon’ble Punjab and Haryana High Court in Adfert Technologies Pvt. Ltd. v. Union of India had held that unutilized credit arising on account of tax paid under erstwhile tax regime is “vested right” and it cannot be taken away on technical ground of non-filing of Form GST TRAN-01. Hence, it was ruled that even if the assessee has not filed the Form GST TRAN-01, they can also file the same now. The SLP filed by the Government/department against this judgement was dismissed by the Hon’ble Supreme Court.

In conclusion, the case of Union of India vs. Arora and Company revolves around the issue of claiming transitional credit under the GST regime. The petitioner faced technical glitches on the common portal, which prevented them from filing Form TRAN-1 within the stipulated time. The Delhi High Court directed the department to allow the petitioner to file the form electronically or accept it manually. However, the matter remains unsettled as the controversy regarding the time limit for transitional credit is still under scrutiny by the Supreme Court. The judgment of the Punjab and Haryana High Court in a similar case has supported the view that unutilized credit is a vested right and can be claimed even if Form GST TRAN-01 was not filed initially.

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Disclaimer: The information given in this article is for general guidance to the readers. This information should not be sought as a substitute for legal opinion.