M/S Kaushal Sales 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 a res integra issue, referencing prior judgments. Therefore, the Court could not entertain 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 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 avail 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 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 this form and to give effect to manually submitted forms to avail 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? (Question of law and fact, 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 avail transitional credit. They also prayed that the respondents should give effect to manually submitted Form GST TRAN-1 to enable them to claim legitimate input tax credit. In some cases, the validity of Rule 117 of the CGST Rules was challenged. Revenue's Arguments: The learned Additional Solicitor General submitted that similar writ petitions had been disposed of by a co-ordinate bench of the High Court in terms of a previous order. The revenue highlighted that the challenge to the constitutional validity of Rule 117 was no longer res integra, citing judgments from the Gujarat High Court and the same High Court. They also noted that the Union of India had extended the last date for submitting GST TRAN-1.