M/S Jallan Furkating Tea Company PVT LTD. 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 a previous decision by a coordinate bench of the same High Court 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 as if there were no last date for filing TRANS-1. However, considering that the Union of India and the Finance Department 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 would then forward it to the jurisdictional officer. This officer would then submit 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 the necessary recommendation to the Commissioner to enable the petitioners to avail CENVAT credit within the stipulated time frame 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 all petitions was the inability of the petitioners to file Form TRAN-1 to avail transitional credit under the Central Goods and Services Tax Act, 2017, and the associated Rules. Petitioners sought directions to permit filing of Form TRAN-1 and to give effect to manually submitted forms, with some also challenging the validity of Rule 117 of the CGST Rules.

Key Issues

1. Whether the petitioners should be permitted to file Form TRAN-1 to avail transitional credit under the Central Goods and Services Tax Act, 2017, and the CGST Rules, 2017, to enable them to claim transitional credit in their Electronic Credit Ledger? (Question of law) 2. Whether the respondents should give effect to Form GST TRAN-1 that had been manually submitted by the petitioners to avail relevant legitimate Input Tax Credit? (Question of mixed law and fact) 3. Whether Rule 117 of the CGST Rules, 2017, which prescribes the procedure and timeline for claiming transitional credit, is constitutionally valid? (Question of law) Petitioner's arguments: The petitioners contended that they were unable to file Form TRAN-1 within the stipulated timelines due to technical glitches or other administrative issues, and therefore, they should be allowed to file it to claim their legitimate transitional credit. Some petitioners challenged the constitutional validity of Rule 117, arguing it violates constitutional provisions by imposing an arbitrary cut-off date. Revenue's arguments: The Revenue relied on a coordinate bench's decision in Obelisk Composite Technology LLP Vs. Union of India & Others, which held that the challenge to the constitutional validity of Rule 117 was no longer res integra, citing Gujarat High Court's decision in Willowood Chemicals Pvt. Ltd. Vs. Union of India. The Revenue also noted that the Union of India had extended the last date for submitting GST TRAN-1 up to December 31, 2019.