Viraya Steels 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, referencing previous judgments of the Rajasthan High Court and the Gujarat High Court in cases like M/s Anupam Motors Vs. Union of India and Willowood Chemicals Pvt. Ltd. Vs. Union of India. 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. 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 permitted 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' assertion was found to be correct, the GST Council was directed to issue the necessary recommendation to the Commissioner to enable the petitioners to get the benefit of CENVAT credit within the stipulated time, i.e., on or before 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 associated rules. The petitioners sought directions to allow them to file Form TRAN-1 and to give effect to manually submitted forms to avail input tax credit. Some petitions also challenged the validity of Rule 117 of the CGST Rules.

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, to avail credit in their Electronic Credit Ledger? (Question of law) 2. Whether the respondents should give effect to Form GST TRAN-1 that was manually submitted by the petitioners to avail legitimate input tax credit? (Question of mixed law and fact) 3. Whether Rule 117 of the CGST Rules, which prescribes the procedure and time limit for claiming transitional credit, is valid? (Question of law) Petitioner's arguments: The petitioners contended that they were unable to file Form TRAN-1 on the common portal and sought permission to file it, either electronically or manually, to claim their rightful transitional credit. They argued that the respondents should accept and give effect to manually filed forms. Some petitioners also challenged the constitutional 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. Revenue's arguments: The revenue, through the learned Additional Solicitor General, submitted that similar writ petitions had been disposed of by a co-ordinate bench in terms of a previous order. They also brought to the Court's notice that the challenge to Rule 117 was no longer res integra, citing judgments from this Court and the Gujarat High Court. The revenue acknowledged that the Union of India had extended the last date for submitting GST TRAN-1 up to December 31, 2019, and referred to the procedure stipulated under Sub-rule 1(A) of Rule 117.