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IN THE HIGH COURT OF JUDICATURE AT MADRAS
A.P. Sahi, Senthilkumar Ramamoorthy, JJ.
M/s. P.R. Mani Electronics Rep. by its Proprietor, Thiruvannamalai – Petitioner
Versus
Union of India Rep. by Secretary, Ministry of Finance, New Delhi & Others – Respondents
Writ Petition No. 8890 of 2020 & WMP. No. 10803 of 2020
Decided On : 13-07-2020
Constitution of India, 1950 – Article 226, 14, 300 – Central Goods and Services Tax Act, 2017 – Section 140 – Central Goods and Service Tax(CGST) Rules – Rule 117 – Writ of declaration – Petition filed under Article 226 of the Constitution of India, praying to issue a writ of declaration to declare that Rule 117 of Central Goods and Service Tax(CGST) Rules is ultra vires and unconstitutional in so far as petitioner consent and also to direct the Respondents authorities to permit the Petitioner to file Form GST Trans – 1 either electronically or manually to claim the transitional input tax credit of Rs.4,70,008/- accrued and vested with the Petitioner and grant such other relief – Held, use of peremptory or negative language, which raises a rebuttable presumption that the provision is mandatory; the object and purpose of the statute and the provision concerned; the stipulation or otherwise of the consequences of non- compliance; whether substantive rights are affected by non-compliance; whether the time limits are in relation to the exercise of rights or availing of concessions; or whether they relate to the performance of statutory duties. – In this case, the peremptory word "shall" is used. – The relevant rule deals with the time limit for availing Transitional ITC by carrying it forward from the credit balance under tax legislations which have been repealed and replaced by the CGST Act. – Thus, the object and purpose of Section 140 clearly warrants the necessity to be finite. ITC has been held to be a concession and not a vested right. – In effect, it is a time limit relating to the availing of a concession or benefit. – If construed as mandatory, the substantive rights of the assessees would be impacted; equally, if construed as directory, it would adversely impact the Governments revenue interest, including the predictability thereof. – On weighing all the relevant factors, which may be not be conclusive in isolation, in the balance, we conclude that the time limit is mandatory and not directory. – Court also note that Rule 117 specifies that the return in Form GST TRAN – 1 is required to be filed electronically on the common portal. This requirement is not satisfied by handing over the form in person to the Sales Tax Collection Inspector, Tiruvannamalai. – Petitioner has completely failed to make out a case to direct the Respondents to permit the Petitioner to file Form GST TRAN -1 and claim the Transitional ITC of Rs.4,70,008/-. – Needless to say, if any dispensations are granted by the tax authorities with regard to availing of Transitional ITC, whether by filing Form GST TRAN-1 or otherwise, and to which the Petitioner may be entitled, this order will not preclude the Petitioner from making a claim for Transitional ITC. – Writ Petition Dismissed
JUDGMENT :
Senthilkumar Ramamoorthy, J.
(Prayer: Petition filed under Article 226 of the Constitution of India, praying to issue a writ of declaration to declare that Rule 117 of Central Goods and Service Tax(CGST) Rules is ultra vires and unconstitutional in so far as petitioner consent and also to direct the Respondents authorities to permit the Petitioner to file Form GST Trans – 1 either electronically or manually to claim the transitional input tax credit of Rs.4,70,008/- accrued and vested with the Petitioner and grant such other relief.)
1. The validity of Rule 117 of the Central Goods and Service Tax Rules, 2017 (the CGST Rules) is under challenge in this writ petition on the grounds that it is ultra vires Section 140 of the Central Goods and Services Tax Act, 2017 (the CGST Act) and infringes Articles 14 and 300A of the Constitution, and the Petitioner further prays that the Respondents should be directed to permit the Petitioner to file Form GST TRANS – 1 either electronically or manually to claim the transitional input tax credit of Rs.470008/-.
2. The Petitioner is a proprietary concern involved in the retail trade of mobile phones, electrical, electronic, and other items. Earlier, the Petitioner was registered as a dealer under the Tamil Nadu Value Added Tax Act, 2006 (the TNVAT Act) and, upon the coming into force of the CGST Act, the Integrated Goods and Services Tax Act, 2017 (the IGST Act) and the State Goods and Services Act, 2017 (the SGST Act) (two or more of which are referred to as the GST laws) on 01.07.2017, the Petitioner obtained registrations under the GST laws. When the CGST and SGST Acts were introduced, as a transitional measure, the carry forward of credit for taxes paid on inputs under previously existing indirect tax laws, which may be referred to as transitional ITC (Transitional ITC), was enabled by making provision in respect thereof. In terms thereof, according to the Petitioner, he is entitled to avail Transitional ITC of Rs.4,62,496/- under the head of CGST and Rs.7,512/- under the head of SGST under the respective GST laws.
3. Section 140 of the CGST Act deals with Transitional ITC under the CGST Act. The said Section 140, inter alia, reads as under:
“140. Transitional arrangements for input tax credit- (1) A registered person, other than a person opting to pay tax under section 10, shall be entitled to take, in his electronic credit ledger, the amount of CENVAT credit carried forward in the return relating to the period ending with the day immediately preceding the appointed day, furnished by him under the existing law within such time and in such manner as may be prescribed (emphasis added) :
Provided that the registered person shall not be allowed to take credit in the following circumstances, namely : —
(i) where the said amount of credit is not admissible as input tax credit under this Act; or
(ii) where he has not furnished all the returns required under the existing law for the period of six months immediately preceding the appointed date; or
(iii) where the said amount of credit relates to goods manufactured and cleared under such exemption notifications as are notified by the Government.
(2) A registered person, other than a person opting to pay tax under section 10, shall be entitled to take, in his electronic credit ledger, credit of the unavailed CENVAT credit in respect of capital goods, not carried forward in a return, furnished under the existing law by him, for the period ending with the day immediately preceding the appointed day in such manner as may be prescribed: Provided that the registered person shall not be allowed to take credit unless the said credit was admissible as CENVAT credit under the existing law and is also admissible as input tax credit under this Act. Explanation.–– For the purposes of this sub-section, the expression “unavailed CENVAT credit” means the amount that remains after subtracting the amount of CENVAT credit already availed in respect of capital goods
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