M/S.J.Saraswathiammal Powerloom vs. Goods And Service Tax Council

Held

The Court held that the respondents' stand, requiring the petitioners to prove technical glitches, was too narrow and technical. The Court respectfully followed the decision in W.P.No.3328 of 2020 and the subsequent dismissal of the department's appeal in W.A. No.788 of 2020. The reasoning was that the requirement to establish a demonstrable glitch was not explicitly mandated in the Act prior to April 3, 2018, and assessees could not have been expected to collect evidence of such difficulties. The Court directed respondent Nos. 5 to 7 (Nodal Officer/Joint Commissioner (State Tax), Joint Commissioner (CS), and State Tax Officer) to take up the matter again with GSTIN and ensure that the TNVAT credit available to the petitioners is duly reflected in their respective Electronic Credit Ledgers. This exercise was to be concluded within twelve weeks from the date of receipt of the order. The ratio decidendi is that in cases of TRAN-1 credit carry-forward issues, a rigid insistence on proof of technical glitches, especially when prior judicial pronouncements have taken a more lenient view, is not appropriate, and authorities should facilitate the credit transfer.

Facts

The petitioners, M/s.J.Saraswathiammal Powerloom, M/s.Aruna International, M/s.Shiva Fabrics, and M/s.Aruna Powerloom, were registered dealers under the Tamil Nadu Value Added Tax Act, 2006. Following the implementation of the GST regime on July 1, 2017, they filed TRAN-1 declarations to carry forward their Input Tax Credit (ITC). However, the ITC was not reflected in their Electronic Credit Ledger. The petitioners had been submitting representations since January 30, 2019, which were forwarded through various levels of GST authorities. The respondents' stand was that the petitioners failed to prove technical glitches in the portal, thus disentitling them to relief. The amounts in dispute were Rs.1,77,051/-, Rs.7,33,937/-, Rs.1,33,731/-, and Rs.7,33,937/- respectively.

Key Issues

1. Whether the petitioners are entitled to have their TNVAT credit reflected in their Electronic Credit Ledger, despite not proving technical glitches in the GST portal, considering the amendments to Rule 117 and prior judicial pronouncements? (Question of law and mixed fact and law, turning on Rule 117 of the CGST Rules and Article 226 of the Constitution of India). Petitioner's contention: The petitioners argued that the respondents' stand, requiring proof of technical glitches, was too narrow and technical. They relied on a Madras High Court order in W.P.No.3328 of 2020, which held that the requirement to prove technical difficulties was not explicitly stated in the Act prior to April 3, 2018, and that assessees could not have anticipated the need to collect such evidence. They also cited the subsequent dismissal of the department's appeal in W.A. No.788 of 2020. Revenue's contention: The respondents contended that the petitioners had not proven that the failure to successfully upload the TRAN-1 declaration was due to technical glitches in the portal, and therefore, they could not be granted relief.