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2020 Supreme(Bom) 950
IN THE HIGH COURT OF BOMBAY
Ujjal Bhuyan, Abhay Ahuja, JJ.
Heritage Lifestyles And Developers And Private Limited - Appellant
Versus
Union Of India - Respondent
Writ Petition (S T) No. 3705 of 2020
Decided On : 05-11-2020
Bharat Raichandani, Advocate, Ubr Legal, Advocate, Pradeep S Jetly, Advocate, Jitendra Mishra, Advocate
The denial of input tax credit based on technical grounds, despite the petitioner's eligibility, was unjust and warranted the court's intervention.
Headnote:
Input Tax Credit - GST - Rule 117, Rule 118 of Central Goods and Service Tax rules 2017 - Section 140(1), Section 140(3), 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 the Constitution of India - Article 269A - Summary of Acts and Sections: The court discussed the eligibility of input tax credit under Rule 117 and Rule 118 of the CGST Rules in relation to Section 140(1), Section 140(3), and Section 9 of the CGST Act, as well as various articles and entries of the Constitution of India. The court emphasized the technical glitches faced by the petitioner in filing TRAN-1 and the subsequent denial of credit by the ITGRC. The court invoked its writ jurisdiction to order the acceptance of the TRAN-1 and the granting of due input tax credit to the petitioner.
Fact of the Case:
The petitioner, a private limited company engaged in real estate construction, sought input tax credit under the CGST Act. Due to technical glitches, the petitioner could not file TRAN-1 within the stipulated time. The ITGRC denied the credit, leading to the petitioner filing a writ petition challenging the denial and the vires of Rules 117 and 118 of the CGST Rules.
Finding of the Court:
The court found that the petitioner was eligible for input tax credit amounting to Rs. 78,62,466, and the denial based on technical grounds was unjust. The court invoked its writ jurisdiction and directed the respondents to accept the TRAN-1 and grant the due input tax credit to the petitioner.
Issues: The issues involved the eligibility of input tax credit under the CGST Act, the denial of credit by the ITGRC, and the vires of Rules 117 and 118 of the CGST Rules.
Ratio Decidendi: The court held that the denial of input tax credit based on technical grounds, despite the petitioner's eligibility, was unjust and invoked its writ jurisdiction to order the acceptance of the TRAN-1 and the granting of due input tax credit to the petitioner.
Final Decision: The petition was allowed, and the respondents were directed to accept the TRAN-1 and grant the due input tax credit to the petitioner. No costs were awarded.
JUDGMENT
Abhay Ahuja, J. - Heard. Rule. Rule made returnable forthwith. By the consent of the Counsel for the parties, the matter is taken up for final hearing.
2. Being aggrieved and dissatisfied by the inaction on the part of the Respondent authorities in not giving Input tax credit to the claim of the Petitioner pursuant to the Board Circular No. 39/13/2018-GST dated 3rd April, 2018, the Petitioner has sought to not only challenge the said inaction but also to challenge the vires of Rule 117 and Rule 118 of the Central Goods and Service Tax Rules, 2017 as null and void and ultra vires Section 140 (1), Section 140 (3) and Section 9 of the 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 the Constitution of India and as also being beyond the legislative competence of the Parliament under Article 269-A of the Constitution of India and has prayed for the following reliefs:-
(a) that this Hon'ble Court may be pleased to issue Any writ, order or direction more particularly in the nature of a 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 the Constitution of India and as also being beyond the legislative competence of Parliament under Article 269A of the 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 the facts and circumstance of the case and thus render justice;
(b) that this Hon'ble Court be pleased to issue a Writ of Certiorari or a writ in the nature of Certiorari or any other writ, order or direction under Article 226 of the Constitution of India calling for the records pertaining to the Petitioner's case and after going into the validity and legality of the provisions, direct the Respondents to pass such directions to allow the petitioner to file Tran-1 electronically and carry forward the eligible cenvat credit in the electronic credit ledger/ Input tax credit account;
(c) that this Hon'ble Court be pleased to issue a writ of mandamus or any other writ in the nature of Certiorari or any other writ, order or direction under Article 226 of the Constitution of India calling for the records pertaining to the Petitioner case and direct Respondents to either accept copy of TRAN-1 in physical form and give due credit from back end or allow to file the declaration under TRAN-1 electronically and reflect the said input tax credit in the electronic credit ledger / input tax credit account.
3. It is submitted that the Petitioner is a Private limited company, inter-alia engaged in the business of construction and development of real estate for the purpose of sale to prospective buyers and is registered as a dealer under the provisions of the Maharashtra Value Added Tax Act, 2002 (the "MVAT Act") as well as registered under the provisions of the Central Goods and Services Tax Act, 2017 ("CGST Act") as a 'service provider' and also as "registered dealer".
4. It is submitted that under the pre-GST regime, the Petitioner was paying Service tax on the services and filing returns. It was therefore availing credit/set off of service tax paid on input service. Under the pre-GST regime, the Petitioner was also paying MVAT on the sale of goods, filing returns and also availing credit/set off of MVAT.
5. Post introduction of the CGST Act, 2017 with effect from 01.07.2017, pursuant to the transitional provisions contained in Chapter XX of the CGST Act, 2017 as well as under Chapter XX of the Maharashtra Goods and Services Tax Act, 2017 ("MGST Act"), the Petitioner was entitled to carry forward Input tax credit as on 30.06.2017 in the TRAN-1 form for the period from 01.07.2016 to 30.06.2
