M/S Agarwal Brothers 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 the decision in Obelisk Composite Technology LLP (supra) and the Gujarat High Court's judgment in Willowood Chemicals Pvt. Ltd. Consequently, 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, along with necessary particulars, evidence, and a certified copy of the order. The GST Council was to take a decision forthwith, and if the petitioners' assertion was found to be correct, it was to issue a necessary recommendation to the Commissioner to enable the petitioners to get the benefit of CENVAT credit within the stipulated time (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 be permitted to file Form TRAN-1 and for the respondents to give effect to manually submitted forms to avail input tax credit.

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/law, 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 manually submitted forms should be given effect. In some petitions, the validity of Rule 117 of the CGST Rules was challenged. Revenue's Arguments: The Revenue, through the Additional Solicitor General, submitted that similar writ petitions had been disposed of by a co-ordinate bench of the High Court in the case of Obelisk Composite Technology LLP Vs. Union of India & Others, and therefore, the present petitions should be disposed of in terms of that order. The Revenue also 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 the Gujarat High Court's decision in Willowood Chemicals Pvt. Ltd. Vs. Union of India, and that challenges to the constitutional validity of Section 140(3) of the CGST Act and the proviso to Rule 117 were dismissed.