M/S V. S. Enterprises 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, referencing the judgment in Obelisk Composite Technology LLP Vs. Union of India & Others. Consequently, the Court rejected the prayer to declare Rule 117 unconstitutional or to read it down to remove the last date for filing TRAN-1. However, considering that the Union of India had extended the period contemplated under Rule 1A of Rule 117 until December 31, 2019, the Court granted liberty to the petitioners. They were directed to make an application before the GST Council through the Standing Counsel, who was requested to forward it to the jurisdictional officer. This officer would then forward it to the GST Council for issuing a requisite certificate of recommendation, along with necessary particulars and evidence. If the petitioners' assertion was found to be correct, the GST Council was to issue a necessary recommendation to the Commissioner to enable the petitioners to avail CENVAT credit within the stipulated time of December 31, 2019. The writ petitions were disposed of in terms of these directions.

Facts

Multiple petitioners, including Trivedi Ventures LLP, M/s Ceramic Tableware Private Limited, SRF Limited, Biogenetic Drugs Private Limited, M/s Pyramid Abrasives Pvt. Ltd., Viraya Steels Pvt. Ltd., M/s. Anusika Industries Limited, M/s Rays Power Experts Private Limited, M/s Agarwal Brothers, M/s. SRK Solenergi Private Limited, and M/s. Universal Cylinders Limited, filed writ petitions before the Rajasthan High Court. The core issue in these petitions was the inability of the petitioners to file Form TRAN-1 to claim transitional credit under the Central Goods and Services Tax Act, 2017, and the CGST Rules, 2017. Some petitioners also challenged the validity of Rule 117 of the CGST Rules. The petitioners sought directions to allow them to file Form TRAN-1 and to give effect to manually submitted forms for availing input tax credit.

Key Issues

1. Whether the petitioners should be permitted to file Form TRAN-1 to claim transitional credit under the CGST Act and Rules, and whether the respondents should give effect to manually submitted forms for availing input tax credit? (Question of law and mixed fact and law, concerning Section 140 of the CGST Act and Rule 117 of the CGST Rules). Petitioner's contention: The petitioners argued that they should be allowed to file Form TRAN-1 to claim transitional credit. They also sought to have manually submitted forms recognized for availing input tax credit. Some petitioners challenged the validity of Rule 117 of the CGST Rules, arguing it violates constitutional provisions and should be read down to remove any last date for filing TRAN-1. Revenue's contention: The Revenue brought to the Court's notice a previous judgment by a co-ordinate bench in Obelisk Composite Technology LLP Vs. Union of India & Others, which disposed of similar writ petitions. The Revenue also pointed out that the Union of India had extended the last date for submitting GST TRAN-1 up to December 31, 2019, and that Sub-rule 1(A) of Rule 117 requires an application through the GST council for recommendation.