M/S Sarvodaya Fertilizers And Chemicals vs. Union Of INDIA

Held

The Court held that the challenge to the constitutional validity of Rule 117 of the CGST Rules was no longer res integra, referring to previous judgments by the same court and the Gujarat High Court. Therefore, the court could not entertain the prayer to declare Rule 117 unconstitutional. However, considering that the Union of India had extended the period for filing TRAN-1 and that the procedure under Rule 117 requires a recommendation from the GST Council, the Court granted liberty to the petitioners. They were directed to make an application before the GST Council through the Standing Counsel, who would hand it over to the jurisdictional officer for forwarding. The GST Council was to take a decision forthwith, and if the petitioners' assertions were found correct, the Council was to issue a necessary recommendation to the Commissioner to enable the petitioners to get the benefit of CENVAT credit within the stipulated time (on or before December 31, 2019). The writ petitions were disposed of in terms of these directions.

Facts

Two writ petitions were filed by M/s Venkateswara Wires Pvt. Ltd. and M/s Sarvodaya Fertilizers And Chemicals. The petitioners sought permission to file Form TRAN-1 under the Central Goods and Services Tax Act, 2017 and Rules, 2017, to avail transitional credit. They also prayed for the respondents to give effect to manually submitted Form GST Tran-1. The validity of Rule 117 of the CGST Rules was challenged. The High Court noted that a similar writ petition, Obelisk Composite Technology LLP Vs. Union of India & Others, had been disposed of by a Co-ordinate Division Bench of the same court.

Key Issues

1. Whether the petitioners should be permitted to file Form TRAN-1 to avail transitional credit under the CGST Act, 2017 and CGST Rules, 2017? (Question of law and mixed fact and law, concerning Section 140 and Rule 117). 2. Whether Rule 117 of the CGST Rules, 2017, which prescribes the procedure for claiming transitional credit, is constitutionally valid? (Question of law, concerning Rule 117). Petitioner's arguments: The petitioners argued that they should be allowed to file Form TRAN-1 to claim transitional credit and that manually submitted forms should be given effect. They also challenged the validity of Rule 117 of the CGST Rules. Revenue's arguments: The Revenue brought to the court's notice a previous judgment by a Division Bench of the same court in M/s Anupam Motors Vs. Union of India, which held that the challenge to Rule 117 was no longer res integra, citing a Gujarat High Court decision in Willowood Chemicals Pvt. Ltd. Vs. Union of India. The Revenue also submitted that the Union of India had extended the last date for submitting GST TRANS-1 and that Sub-rule 1(A) of Rule 117 requires an application through the GST council for recommendation.