M/S Big Rings The Tyre World 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 (supra) and the Gujarat High Court's ruling in Willowood Chemicals Pvt. Ltd. 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 to make an application before the GST Council through the Standing Counsel. The Standing Counsel was requested to hand over the application to the jurisdictional officer for forwarding to the GST Council. The GST Council was directed to issue a requisite certificate of recommendation, along with necessary particulars and evidence, to the Commissioner, enabling the petitioners to get the benefit of CENVAT credit within the stipulated time frame of December 31, 2019, if their assertions were found to be correct. 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 associated rules. The petitioners sought permission to file Form TRAN-1 and for the respondents to give effect to manually submitted forms to avail legitimate input tax credit. In some petitions, Rule 117 of the CGST Rules was also challenged.

Key Issues

1. Whether the petitioners should be permitted to file Form TRAN-1 to claim transitional credit under the Central Goods and Services Tax Act, 2017, and the Central Goods and Services Tax Rules, 2017, in order to avail transitional credit in their Electronic Credit Ledger? 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? 3. Whether Rule 117 of the CGST Rules, which prescribes the procedure and timeline for claiming transitional credit, is constitutionally valid? Petitioner's arguments: The petitioners contended that they were unable to file Form TRAN-1 on the common portal and sought directions for the respondents to allow them to file it, either electronically or manually, to claim their eligible transitional credit. They also argued for the validity of manually submitted forms. In some cases, the petitioners challenged the constitutional validity of Rule 117 of the CGST Rules. Revenue's arguments: The revenue, through the learned Additional Solicitor General, submitted that a similar writ petition, Obelisk Composite Technology LLP Vs. Union of India & Others, had been disposed of by a co-ordinate bench of the High Court. They referred to a judgment in M/s Anupam Motors Vs. Union of India, which held that challenges to Rule 117 were no longer res integra in view of a Gujarat High Court 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. The revenue also noted that the last date for submitting GST TRAN-1 had been extended to December 31, 2019.