M/S Kambay Aromatics vs. Union Of INDIA

Held

The Court held that the petitioner is entitled to claim credit of CENVAT and service tax as on June 30, 2017, in terms of Section 140(1) of the CGST Act, 2017, read with Rule 117 of the CGST Rules, 2017. The Court found merit in the petitioner's submission that they could not upload Form GST TRAN-1 due to technical glitches and that their representations were not considered. Relying on the settled legal position, including the decision in M/s Siddharth Enterprises and the extension granted by Order No. 01/2020-GST, the Court directed Respondent No. 4 (the jurisdictional officer) to verify the petitioner's claim for CENVAT and service tax credit. Upon verification, the petitioner is to be enabled to file/upload Form GST TRAN-1 on the GST portal. The Court further directed that this verification and permission to upload should be completed within two weeks from the receipt of the order, enabling the petitioner to upload the form on or before March 31, 2020. The Court emphasized that the due date for claiming transitional credit under Rule 117 is procedural and not mandatory when technical difficulties arise.

Facts

The petitioner, M/s Kambay Aromatics, sought a writ of mandamus to allow them to carry forward CENVAT credit amounting to Rs. 16,88,141 and VAT credit of Rs. 1,02,865. They claimed that due to technical glitches on the GST portal, they were unable to file Form GST TRAN-1 to claim this transitional credit, which was admissible under Section 140 of the CGST Act, 2017, read with Rule 117 of the CGST Rules, 2017. Despite approaching the GST Department and the Nodal Officer, their grievance remained unaddressed. The petitioner relied on a coordinate bench's decision in M/s Siddharth Enterprises vs. The Nodal Officer, which allowed similar claims.

Key Issues

1. Whether the petitioner is entitled to carry forward CENVAT and VAT credit under Section 140(1) of the CGST Act, 2017, read with Rule 117 of the CGST Rules, 2017, despite failing to file Form GST TRAN-1 by the due date due to alleged technical glitches? Petitioner's Arguments: The petitioner argued that they are legally entitled to carry forward the CENVAT and service tax credit available as of June 30, 2017, as per Section 140(1) of the Act and Rule 117 of the Rules. They contended that the inability to file Form GST TRAN-1 was solely due to technical issues on the GST portal, and not due to any fault on their part. They relied on the Gujarat High Court's decision in M/s Siddharth Enterprises, which held that the right to carry forward credit is a legitimate right and that the due date for filing TRAN-1 is procedural, not mandatory, especially when technical glitches prevent filing. They also cited Order No. 01/2020-GST extending the time limit for such cases. Revenue's Arguments: The respondents initially claimed that no technical glitches were found in the petitioner's case, hence they were not allowed to upload Form GST TRAN-1. However, when queried about the genuineness of the claim, the learned standing counsel submitted that if the claim is found to be genuine upon verification, the petitioner could file/upload GST TRAN-1.