Jakap Metind PVT LTD vs. Union Of INDIA Through The Secretary

Held

The Court held that the petitioner was entitled to the transitional input tax credit of Rs. 83,99,136/-. The Court noted that the respondents admitted the petitioner was otherwise entitled to this credit. The denial was solely based on the expiry of the time limit for filing a revised TRAN-1 form, which the Court found to be unsustainable. The Court referred to the Delhi High Court's decisions in M/s Blue Bird Pure Pvt. Ltd. and M/s Aadinath Industries, emphasizing that the system should provide for rectification of bona fide errors and that the deadline for revision coinciding with the filing deadline made the facility impractical. The Court further held that retaining the credit amount would be violative of Article 265 of the Constitution, as the respondents had no legal authority to do so. The Court directed the respondents to either open the online portal for the petitioner to file a rectified FORM GST TRAN-1 electronically or to accept the manually filed corrected form by November 30, 2019. The Court also expressed concern over the unaddressed representations of the petitioner.

Facts

The petitioner, JAKAP METIND PVT LTD, sought to claim transitional input tax credit under Section 140 of the CGST Act, 2017, read with Rule 117 of the CGST Rules, 2017. The petitioner was entitled to transitional credit of Rs. 83,99,136/- based on its closing balance under ER-1/ER-2 returns, unavailed credit of capital goods (Rs. 5,70,328/-), and duty/tax paid on inputs and input services (Rs. 2,93,727/-). The petitioner filed FORM GST TRAN-1 on December 23, 2017, but inadvertently uploaded the Rs. 83,99,136/- amount in column 5 of Table 5a instead of column 6. The credit of Rs. 8,64,055/- (Rs. 5,70,328/- + Rs. 2,93,727/-) was granted, but the Rs. 83,99,136/- was denied as the time limit for filing a revised TRAN-1 form had elapsed on December 27, 2017. The petitioner made several representations to the authorities which remained unaddressed, leading to the present petition.

Key Issues

1. Whether the petitioner is entitled to claim transitional input tax credit of Rs. 83,99,136/- under Section 140 of the CGST Act, 2017, and Rule 117 of the CGST Rules, 2017, despite filing the FORM GST TRAN-1 with an inadvertent error in the placement of figures and the subsequent lapse of the time limit for revision. The petitioner argued that the denial of credit was based on a technicality of misplacing figures in the TRAN-1 form due to a misunderstanding of the columns, which should not deprive them of a substantive right to transitional credit. They relied on the principle that credit is a property and cannot be taken away except by authority of law, citing decisions from the Delhi High Court in M/s Blue Bird Pure Pvt. Ltd. vs. Union of India and M/s Aadinath Industries vs. Union of India, which emphasized the need for a robust grievance redressal mechanism and the right to property under Article 300A of the Constitution. The respondents contended that the petitioner was not entitled to the credit as the time limit for filing a revised FORM GST TRAN-1 had expired, and they failed to adhere to the prescribed procedure and timelines.