M/S R 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 decision in Obelisk Composite Technology LLP. Therefore, the Court could not entertain the prayer to declare Rule 117 unconstitutional. However, considering that the Union of India and the Finance Department had extended the period for submitting Form TRAN-1 up to 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. If the petitioners' assertions were found to be correct, the GST 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. 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 all 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 (CGST Act) and CGST Rules, 2017. Some petitioners also challenged the validity of Rule 117 of the CGST Rules. The petitioners sought directions to permit them to file Form TRAN-1 and to give effect to manually submitted forms to avail 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 CGST 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 Arguments: The petitioners argued that they should be allowed to file Form TRAN-1 to claim transitional credit. They also sought directions for the respondents to give effect to manually submitted Form GST TRAN-1 to avail legitimate input tax credit. In some petitions, the validity of Rule 117 of the CGST Rules was challenged. Revenue's Arguments: The Revenue, through the learned Additional Solicitor General, submitted that similar writ petitions had been disposed of by a Co-ordinate Division Bench of the Court in the case of Obelisk Composite Technology LLP Vs. Union of India & Others. The Revenue also brought to the Court's notice a judgment in M/s Anupam Motors Vs. Union of India, which held that challenges to Rule 117 were no longer res integra due to the Gujarat High Court's decision in Willowood Chemicals Pvt. Ltd. Vs. Union of India, dismissing challenges to the constitutional validity of Section 140(3) of the CGST Act and the proviso to Rule 117.