Obelisk Composite Technology LLP vs. Union Of INDIA

Held

The Court held that the challenge to the constitutional validity of Rule 117 of the CGST Rules, 2017, was no longer res integra, referencing the prior Division Bench judgment of the same High Court in M/s Anupam Motors Vs. Union of India, which had upheld the validity of the rule. Consequently, the Court rejected the petitioner's prayer to declare Rule 117 unconstitutional or to read it down. However, considering that the Union of India and the Finance Department had extended the period for submitting Trans-1 till December 31, 2019, the Court granted liberty to the petitioner to make an application before the GST Council (through the Standing Counsel, who was requested to forward it to the jurisdictional officer). This application was to seek a recommendation from the GST Council to the Commissioner, enabling the petitioner to claim the benefit of CENVAT credit within the stipulated time. The Court directed that a decision on such an application should be taken forthwith. The Court did not expressly leave any issue undecided.

Facts

The petitioner, M/s Obelisk Composite Technology LLP, sought a writ of mandamus to allow them to file Form GST Trans-1 to claim transitional credit of eligible duties. They also prayed to declare Rule 117 of the CGST Rules unconstitutional for imposing a last date for filing Trans-1, or to read it down as having no last date. Additionally, they requested the revival of the filing facility for Trans-1 on the common portal. The Revenue pointed to a previous Division Bench judgment of the same High Court in M/s Anupam Motors Vs. Union of India, which upheld the validity of Rule 117 and dismissed challenges to Section 140(3) and the proviso to Rule 117, citing the Gujarat High Court's decision in Willowood Chemicals Pvt. Ltd. The Revenue also noted that the last date for submitting Trans-1 had been extended to December 31, 2019, but Sub-rule 1(A) of Rule 117 required an application through the GST counsel for recommendation to the Commissioner.

Key Issues

1. Whether Rule 117 of the CGST Rules, 2017, which prescribes a last date for filing Form GST Trans-1, is unconstitutional and liable to be struck down or read down to have no last date for claiming transitional credit under Section 140 of the CGST Act, 2017? Petitioner's arguments: The petitioner contended that Rule 117 is unconstitutional as it violates the provisions of Section 140 of the CGST Act by imposing a restrictive last date for claiming transitional credit, thereby denying eligible taxpayers their rightful credit. They argued that the rule should be read down to allow filing without a time limit. Revenue's arguments: The Revenue argued that the challenge to the constitutional validity of Rule 117 is no longer res integra, citing the Division Bench judgment of the same High Court in M/s Anupam Motors Vs. Union of India, which relied on the Gujarat High Court's decision in Willowood Chemicals Pvt. Ltd. This precedent had dismissed similar challenges to Section 140(3) of the CGST Act and the proviso to Rule 117. The Revenue also highlighted that the last date for filing had been extended to December 31, 2019, and that a specific procedure under Sub-rule 1(A) of Rule 117 was available.