Precision Gasification Services PVT. LTD. vs. Union Of INDIA

Held

The Court held that the petitioner was entitled to the transitional credit. It found that the petitioner had filed Form GST TRAN 1 within the time provided, and the error in filling the form was inadvertent. The Court reasoned that denying the substantive right to claim transitional credit on the ground that the time limit for filing a revised form had elapsed, especially when the system facility for revision was impractical, was not legally sustainable. The Court further held that retaining the amount of credit to which the petitioner was duly entitled would be violative of Article 265 of the Constitution of India, as the respondents had no legal authority to retain such credit. The ratio decidendi is that substantive rights to transitional credit should not be denied due to bona fide, inadvertent errors in filing GST TRAN 1, particularly when the system's revision mechanism is impractical. The Court directed the respondents to either open the online portal to enable the petitioner to file a rectified Form GST TRAN 1 electronically or accept the manually filed Form GST TRAN 1 with necessary corrections on or before May 18, 2021.

Facts

The writ applicants, Precision Gasification Services Pvt. Ltd., sought to claim transitional tax credit under Section 140(1) of the CGST Act, 2017. They had unutilized input tax credit of Rs.12,30,843/- under the Central Excise Act, 1944, and Rs.20,01,640/- under the Finance Act, 1994. They filed Form GST TRAN 1 within the stipulated time. However, the credit was not reflected in their electronic credit ledger. The authorities informed them that the credit could not be granted because the amount was shown in the wrong column in Form GST TRAN 1. The applicants prayed for a mandamus directing the respondents to grant the transitional credit or to allow revision of Form GST TRAN 1.

Key Issues

1. Whether the petitioner is entitled to transitional credit under Section 140(1) of the CGST Act, 2017, despite an inadvertent error in filing Form GST TRAN 1, considering the substantive right to claim such credit. 2. Whether the denial of transitional credit on the ground of the expiry of the last date for filing a revised Form GST TRAN 1, when the error was bona fide and the system facility for revision was rendered impractical, is legally sustainable. The petitioner argued that they had a substantive right to claim transitional credit and had filed Form GST TRAN 1 within the stipulated time. The error in filling the form was inadvertent, and the denial of credit on technical grounds after the deadline for revision had passed was unjust. They relied on the principle that retention of credit by the respondents would be violative of Article 265 of the Constitution of India. The respondents' argument, as understood from the judgment, was that the petitioner was not entitled to the credit because the last date for filing a revised Form GST TRAN 1 had elapsed, and the credit was shown in the wrong column.