The Hon’ble Delhi High Court in a landmark judgment in the matter of Brand Equity Treaties Limited W.P.(C) 11040/2018, has permitted that GST TRAN-1 can be filed upto 30.06.2020 by all the assesses registered under GST to carry forward/avail their transitional credit.
The Court has directed the Government to open the GSTN portal so as to enable filing of TRAN-1 electronically or accept the same manually. Thus, if portal will not be opened for the same, assessee may file the same manually to their jurisdictional department.
Analysis of the judgment in brief:
- Section 140 of the CGST Act/SGST Act does not provide time limit to file GST TRAN-1 and also does not empower to prescribe the same by rules. However, Rule 117(1) of CGST/SGST Rules provides the time limitation of 90 days which has been extended upto 27.12.2017. Whereas under Rule 117(1A), the time limit to file GST TRAN-1 has been extended several times till 31.03.2020 only for cases where assessee has faced technical difficulties.
Previous judicial pronouncements in this regard:
- In various judgements, the Hon’ble High Courts of the Country has allowed the assessee to file their GST TRAN-1, where the assessee was not able to provide the evidence of technical glitches faced by them.
Question delved into by the Hon’ble Court in the present case:
- Whether the Government could curtail the accrued and vested right, and restrict it to 90 days by a subordinate legislation?
Principles discussed by the Court to arrive at the decision:
- The Court deliberated that the GST Act does not completely restrict the transition of credit in the GST regime by a particular date. The period of 90 days has no rationale. However, the Court held that credit cannot be availed in perpetuity but a period of 3 years is the guiding principle in terms of residuary provisions of the Limitation Act, 1963.
- The approach of the Government should be fair and reasonable. It cannot be arbitrary or discriminatory, if it has to pass the muster of Article 14 of the Constitution. The government cannot turn a blind eye, as if there were no errors on the GSTN portal. Extension of time limit only in cases of technical glitches. There has to be a rationale forthcoming and, in absence thereof, it would be violative of Article 14 of the Constitution.
- The CENVAT credit which stood accrued and vested is the property of the assessee, and is a constitutional right under Article 300A of the Constitution. The same cannot be taken away merely by way of delegated legislation by framing rules, without there being any overarching provision in the GST Act. Credit standing in favour of the assessee is a vested property right under Article 300A of the Constitution and cannot be taken away by prescribing a time-limit for availing the same.
- Rule 117, whereby the mechanism for availing the credits has been prescribed, is procedural and directory, and cannot affect the substantive right of the registered taxpayer to avail of the existing / accrued and vested credit.