Transitional credit rights under GST cannot be denied due to procedural shortcomings when there is no revenue loss, emphasizing the significance of legitimate claims in tax law.

JUDGMENT :

Jitendra Jain, J.

1. Rule. Rule made returnable forthwith. By consent, heard finally at the admission stage.

2. This petition under Article 226 of the Constitution of India challenges an order passed by respondent no.3 whereby the petitioner’s revised TRAN-1 Form dated 28 November 2022 filed under Section 140 of the Central Goods and Service Tax Act, 2017 (‘CGST Act’) has been rejected on the ground that the petitioner has not revised its excise return for the period prior to 1 July 2017 electronically and consequently, the credit of duties cannot be transitioned.

Brief Facts :-

3. The petitioner is engaged in the business of manufacture and sale of industrial catalysts. On 26 August 2017, the petitioner filed its GST Form TRAN-1 for transition of credit of Rs.4,31,30,239/- as per Section 140 of the CGST Act. However, subsequently, the petitioner realised that they had inadvertently failed to claim credit of Rs.1,16,29,351/- relating to 3 Bills of entries in the ER-1 return filed for the month of May/June 2017. This fact was brought to the notice of the respondents by the petitioner within one year from May/June 2017 vide letter dated 16 February 2018. The petitioner requested the respondents to permit filing of revised Form TRAN-1, either manually or by reopening the GST portal.

4. On 7 January 2021, the respondents issued a letter directing the petitioner to reverse the credit which was not taken in the ER-1 return. The petitioner replied to the said letter and stated that no credit has been taken and, therefore, no question of reversing.

5. On 22 July 2022, the Supreme Court in case of Union of India Vs. Filco Trade Centre Pvt. Ltd. , [ 2022 (63) GSTL 162 (S.C.) ] with respect to various technical issues in implementation of the GST directed the GST network to reopen the portal from 1 September 2022 to 31 October 2022 to allow various assessees to file/revise Form TRAN-1. The said date was extended till 30 November 2022.

6. On 23 November 2022, the petitioner manually filed the revised ER-1 return for availing Cenvat credit of Rs.1,16,29,351/- with respect to 3 Bills of entries and also revised TRAN-1 for claiming credit of original amount and additional amount of Rs.1,16,29,351/-. In January/February 2023, respondent no.3 directed the petitioner to submit documents for verification of the revised TRAN-1 and the petitioner replied to the said letter giving reason for the incremental claim and submitted the documents.

7. On 15 February 2023, respondent no.3 issued a show cause notice proposing to reject the revised TRAN-1. The said show cause notice was replied by the petitioner and, thereafter, on 27 February 2023, respondent no.3 passed the impugned order rejecting the revised Form TRAN-1, insofar as additional credit of Rs.1,16,29,351/- is concerned, on the ground that Circular dated 10 November 2022 only allows filing/revising of TRAN-1 or TRAN-2 and not the returns filed under the erstwhile regime.

8. It is on the above backdrop that the petitioner has challenged the impugned order dated 27 February 2023.

Submissions of the Petitioner :-

9. Ms. Rathi, learned counsel for the petitioner did not press for prayer clauses (a) and (b) but only pressed for prayer clause (c) for issuing writ directing respondent no.3 to consider and allow the claim of the petitioner of transitional credit of Rs.1,16,29,351/-. Ms. Rathi submitted that after 1 July 2017, there was no way that the petitioner could have revised the excise returns for the period May/June 2017 electronically since by that time, the GST regime had come into exist