M/S. Srk Solenergi Private Limited vs. The 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, including the Gujarat High Court's decision in Willowood Chemicals Pvt. Ltd. Vs. Union of India and a co-ordinate bench's decision in M/s Anupam Motors Vs. Union of India. Consequently, the Court rejected the prayer to declare Rule 117 unconstitutional. However, considering that the Union of India had extended the period for filing TRAN-1 until December 31, 2019, and referencing the directions in the Obelisk Composite Technology LLP case, 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 the necessary recommendation to the Commissioner to enable the petitioners to avail CENVAT credit within the stipulated time.

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 across 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. They sought permission to file the form and for the respondents 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? (Question of law and mixed fact and law, concerning Section 140 of the CGST Act and Rule 117 of the CGST Rules). 2. Whether Rule 117 of the CGST Rules, which prescribes a last date for filing Form TRAN-1, is constitutionally valid? (Question of law, concerning the validity of Rule 117). Petitioner's arguments: The petitioners argued that they should be allowed to file Form TRAN-1 to avail transitional credit. They also sought directions for the respondents to give effect to manually submitted forms. In some cases, the validity of Rule 117 of the CGST Rules was challenged. Revenue's arguments: The Revenue pointed to a previous judgment by a co-ordinate bench in Obelisk Composite Technology LLP Vs. Union of India & Others, which had disposed of similar writ petitions. The Revenue also noted that the Union of India had extended the last date for submitting GST TRAN-1 up to December 31, 2019, and that the procedure stipulated under Sub-rule 1(A) of Rule 117 required an application through the GST council for recommendation.