Ms The Republic Private Limited Represented Through Its Director Sri Rahul Budhia vs. Union Of INDIA Through The Secretary Ministry Of Finance Department Of Revenue

Facts

The petitioner, M/s The Republic Private Limited, filed a writ petition before the Jharkhand High Court challenging the constitutional validity and vires of Rule 117(1) and Rule 117(2)(b) of the Central Goods and Services Tax Rules, 2017. The petitioner sought a declaration that these rules, which prescribe time and manner for availing transitional credit, were ultra vires Section 140(3) of the CGST Act, 2017, and unconstitutional. The petitioner also sought directions to accept their manual declaration in FORM GST TRAN-1, filed on June 29, 2020, and allow transitional credit of Rs. 36,92,918.92. However, during the proceedings, the petitioner's counsel, on instruction, sought to withdraw the writ petition as the petitioner had filed its revised TRAN-1.

Held

The Court did not delve into the merits of the issues raised. The petitioner, M/s The Republic Private Limited, sought to withdraw the writ petition on the instruction of their counsel, stating that they had filed their revised TRAN-1. The respondents' counsel noted that the case was otherwise covered by the Supreme Court's decision in Union of India and another versus Filco Trade Centre Pvt. Ltd. and another. In light of the petitioner's submission to withdraw the petition, the Court dismissed the writ petition as withdrawn. No specific findings were made on the constitutional validity or vires of the impugned rules, nor was any relief granted or denied on the substantive claims. The procedural history of the petitioner filing a revised TRAN-1 led to the withdrawal.

Key Issues

1. Whether sub-Rule (1) of Rule 117 of the Central Goods and Services Tax Rules, 2017, is ultra vires Section 140(3) read with Section 164 of the Central Goods and Services Tax Act, 2017, to the extent it prescribes time and manner for availing transitional credit? 2. Whether the retrospective amendment of Section 140(3) of the CGST Act, 2017, by Section 128(c) of the Finance Act, 2020, validates sub-Rule (1) of Rule 117 of the CGST Rules, 2017, in the absence of a validation clause? 3. Whether sub-Rule (1) of Rule 117 of the CGST Rules, 2017, is unconstitutional and violative of Articles 14, 19(1)(g), 265, and 300A of the Constitution of India? The petitioner argued that Rule 117(1) and 117(2)(b) imposed restrictions on availing transitional credit that were not contemplated by Section 140(3) of the CGST Act. They contended that the retrospective amendment by the Finance Act, 2020, did not cure the defect in the rules without a specific validation clause. The petitioner also argued that the rules were unconstitutional and violated fundamental rights. The respondents, represented by various counsels for the Union of India and CGST authorities, relied on the Apex Court's decision in Union of India and another versus Filco Trade Centre Pvt. Ltd. and another.