M/S. Shree Motors vs. Union Of INDIA

Held

The Court held that the petitioners were not entitled to any relief. The primary reason for this decision was the finding by the GST Council's ITGRC that there was no evidence of technical errors or submission/filing of Form GST Tran-1 in the system logs for the petitioners' cases. This finding was made after the petitioners had been directed by this Court to file representations and after the GST Council had considered their cases. The Court noted that the ITGRC categorized the petitioners' cases under 'B-1', meaning 'as per GST system log, there are no evidences of error or submissions/filing of TRAN-1'. The Court found that the petitioners were bound by this outcome. Regarding the argument of vested rights, the Court referred to the Supreme Court's decision in Osram Surya (P) Ltd., stating that limitations provided in statutes do not take away vested rights but restrict the time to enforce them. Since Rule 117 of the CGST Rules, which prescribes the limitation, had been upheld, the plea of denial of vested rights due to failure to submit Form GST Tran-1 in time could not be countenanced. The Court also distinguished the cited High Court judgments, noting that in those cases, specific directions to place material regarding technical glitches and attempts to file were not given, and factual findings of failure on the part of the petitioners had not been recorded by the GST Council as they were in the present case.

Facts

The petitioners, M/s. Shree Motors and Gaurav Industries, filed writ petitions challenging the denial of transitional credit under the GST regime. They claimed to have paid central excise duty on goods held in stock as of July 1, 2017, amounting to Rs. 23,27,063/- and Rs. 85,41,755/-, respectively. They were unable to file Form GST Tran-1 on the common portal due to alleged system errors and technical glitches. Previous writ petitions filed by the petitioners had resulted in directions to file representations with the GST Council, which were subsequently considered. The GST Council, in its ITGRC meeting, categorized the petitioners' cases under 'B-1', indicating no evidence of error or submission/filing of TRAN-1 in the GST system logs. Consequently, the GST Council rejected their representations and directed the reversal of any credit taken based on interim orders.

Key Issues

1. Whether the petitioners are entitled to transitional credit under Section 140 of the CGST Act and Rule 117 of the CGST Rules despite failing to file Form GST Tran-1 within the prescribed time due to alleged technical glitches? (Question of law and fact, turning on Section 140 and Rule 117 of CGST Act/Rules). Petitioner's Arguments: - The petitioners argued that they have a vested right to claim credit for taxes already paid and that the denial of credit solely due to technical glitches on the department's portal is unjustified. - They contended that the procedural limitations in Rule 117 should not bar their claim when the failure to comply was due to departmental fault in providing a functional system. - Reliance was placed on various High Court judgments (Triveni Needles Pvt. Ltd., The Tyre Plaza, Blue Bird Pure Pvt. Ltd., Asiad Paints Limited, Jay Bee Industries, Adfert Technologies Pvt. Ltd.) that granted relief in similar situations, irrespective of the availability of technical logs. - They submitted that a Special Leave Petition against the Adfert Technologies judgment was rejected by the Supreme Court, but prayed for their writ petitions to be allowed. Respondent's Arguments: - The respondents argued that the writ petitions lacked substance, as procedures were provided in law (Section 140 and Rule 117) with a prescribed limitation. - They highlighted that the ITGRC meeting, after considering the petitioners' representations pursuant to court directions, found no evidence of technical errors or submission attempts in the system logs, placing their cases in Category B-1. - The respondents contended that the petitioners were bound by this factual finding and were not entitled to relief. - They cited the Supreme Court's decision in Osram Surya (P) Ltd. to support the proposition that limitations prescribed in rules do not take away vested rights but restrict the time to enforce them, and that Rule 117 having been upheld, the plea of denial of vested rights due to failure to file in time could not be sustained.