Krishna Oleo Chemical INDIA Limited vs. Union Of INDIA

Held

The Court held that the time limit for filing Form GST TRAN-1 under Rule 117 of the CGST Rules, 2017, is procedural and not mandatory, especially when the petitioner was unable to file it due to technical glitches on the common portal, without any fault on their part. The Court relied on the principle that the right to transitional credit, accrued when tax was paid on inputs, is indefeasible. It followed the consistent findings of the Apex Court and the ratio laid down in the case of Filco Trade Centre Pvt. Ltd. vs. Union of India. The Court noted that a coordinate bench had previously declared clause (iv) of sub-section (3) of Section 140 as unconstitutional. Therefore, the Court directed the respondents to permit the petitioners to upload the declaration in Form TRAN-1. The petitioners were to complete this exercise by March 31, 2020, as per the Order No. 01/2020-GST, within two weeks from the receipt of the order.

Facts

The petitioners, Krishna Oleo Chemical India Limited, sought to carry forward CENVAT credit of Rs. 1,59,55,594/- as on June 30, 2017, under Section 140 of the CGST Act, 2017, and Rule 117 of the CGST Rules, 2017. They claimed that they were unable to file Form GST TRAN-1 electronically due to technical glitches on the portal on multiple occasions between November and December 2017, despite extensions granted. They submitted a physical copy of Form TRAN-1 on January 30, 2019, and also lodged complaints. The respondents did not grant the credit. The petitioners filed a writ petition seeking directions to consider the physical copy, open the portal for online filing, and allow them to square off their CGST liability with the CENVAT credit.

Key Issues

1. Whether the time limit for filing Form GST TRAN-1, as prescribed under Rule 117 of the CGST Rules, 2017, is mandatory or procedural in nature, particularly when the petitioner could not file it due to technical glitches on the common portal? (Section 140, Rule 117 of CGST Act/Rules). The petitioner argued that the technical glitches prevented them from filing the form within the stipulated period, and therefore, the time limit should not be treated as mandatory. They relied on a coordinate bench's decision in M/s Siddharth Enterprises vs. The Nodal Officer, which held that the time limit provision is procedural and not mandatory, and that the right to transitional credit is indefeasible. They also cited Order No. 01/2020-GST dated February 7, 2020, extending the time for filing TRAN-1 for those facing technical difficulties. The respondents acknowledged the petitioner's inability to upload the form but did not present a strong counter-argument against allowing the filing, seemingly agreeing to directions in view of the February 7, 2020 order.