M/S Deendayal Port Trust vs. Union Of INDIA

Facts

The petitioner, M/s Deendayal Port Trust, is challenging the denial of Input Tax Credit (ITC) amounting to Rs. 99,46,810. The petitioner initially filed a service tax return in Form ST-3 for the period April 1, 2017, to June 30, 2017. Subsequently, they filed a revised ST-3 return on September 17, 2017, claiming ITC of Rs. 6,94,19,228. The petitioner then discovered further unaccounted invoices with ITC of Rs. 99,46,810 and attempted to file a second revised return. However, the online ACES portal did not permit this second revision. Following the implementation of the CGST Act, 2017, the petitioner filed Form Tran-1, including the disputed ITC amount of Rs. 99,46,810, bringing the total claimed ITC to Rs. 7,93,66,038. The revenue authorities issued a notice on December 7, 2018, pointing out the discrepancy between the Tran-1 claim and the last ST-3 return, demanding reversal of the Rs. 99,46,810.

Held

The Court held that the stand taken by the respondents, that an assessee cannot file a revised return again within the prescribed time period under Rule 7B of the Service Tax Rules, 1994, after exercising the option to revise the original return once, is not tenable. The Court found that Rule 7B permits an assessee to submit a revised return to correct a mistake or omission within ninety days from the date of submission of the original return. The Court interpreted this rule to mean that an assessee can revise the return filed under Rule 7 multiple times within the prescribed period. The ACES portal not allowing the petitioner to revise the Form ST-3 for the second time within the prescribed period, resulting in technical glitches, was found to be contrary to the provisions of Rule 7B. The Court reasoned that the differential amount of ITC of Rs. 99,46,810 cannot be denied to the petitioner on the ground of technical glitches preventing a second revised return, as there is no prohibition in Rule 7B to file more than one revised return within the stipulated period. The Court directed the respondents to consider the petitioner's claim for ITC of Rs. 99,46,810 manually under Rule 7B of the Rules, 1994, to enable the petitioner to revise Form Tran-1 online on or before March 31, 2020. This exercise was to be completed within two weeks of receiving the order.

Key Issues

1. Whether the petitioner can claim Input Tax Credit (ITC) of Rs. 99,46,810, which was left out due to technical glitches preventing a second revision of the service tax return in Form ST-3, despite the transitional provisions of the CGST Act, 2017, and Section 140 of the CGST Act, 2017? Petitioner's arguments: The petitioner contended that they cannot be denied their legitimate ITC claim on technical grounds, especially when the ACES portal prevented a second revision of the ST-3 return. They argued that Rule 7B of the Service Tax Rules, 1994, allows for correction of mistakes or omissions within 90 days, and the intention of the rule is to allow revisions within the prescribed period, not to restrict it to a single revision. They further argued that if there is no mechanism in Tran-1 to reconcile variations, the actual ITC amount should be granted manually after verification. Revenue's arguments: The revenue authorities argued that as per Rule 7B of the Service Tax Rules, 1994, an assessee can file only one revised return within 90 days of the original submission. The ACES portal's inability to allow a second revision was presented as a consequence of this rule. They also noted a discrepancy between the ITC claimed in the last ST-3 return and the amount claimed in Form Tran-1.