Shree Ambika Fertilizers Through Its Partner Shrikant Dwarkadas Bhutada vs. The Union Of INDIA And Others

Held

The Court acknowledged that the challenge to the validity of Section 140 and Rule 117 had been negatived in the case of Nelco Limited. However, considering the specific facts of Writ Petition No. 1690 of 2019, where the petitioner inadvertently missed a claim in Form TRAN-1, the Court found that the interest of justice would be served by allowing the petitioner to correct Form TRAN-1 and file Form TRAN-2. The Court clarified that the Heritage Lifestyles judgment did not hold that Section 140 and Rule 117 were directory and not mandatory. Instead, it directed the respondents to consider the petitioner's corrected forms in accordance with Section 140 and Rule 117(1). The jurisdictional Assessing Authority was directed to consider all issues raised by the petitioner, including the merits and the effect of the cited judgments, and take an appropriate decision within four weeks. If the petitioner's case was accepted, the reliefs would be granted within four weeks thereafter. For other petitioners who had not filed any forms, no specific directions were given in the judgment excerpt provided.

Facts

The petitioners, including Ambica Fertilizers and others, filed writ petitions challenging the rejection of their claims for transitional input tax credit under the Goods and Services Tax (GST) regime. Specifically, in Writ Petition No. 1690 of 2019, the petitioner, Ambica Fertilizers, claimed to have inadvertently missed claiming approximately ₹13,17,956/- in Form TRAN-1. They were unable to revise the form after the due date of December 27, 2017, as there was no provision for revision beyond the initial filing and a single revision within the due date. The petitioners argued that the time prescribed for filing these forms was directory, not mandatory, and sought permission to correct their TRAN-1 forms and claim the credit.

Key Issues

1. Whether the time prescribed under Rule 117(1) of the Central Goods and Services Tax Rules, 2017, for filing Form TRAN-1 is directory or mandatory, particularly concerning the petitioner's inability to correct an inadvertent error in the initial filing? 2. Whether the petitioners, who missed claiming transitional input tax credit due to errors or omissions in Form TRAN-1, should be permitted to revise or refile the form to claim such credit? Petitioner's Arguments: The petitioners contended that the time prescribed under Rule 117(1) is directory, relying on the judgment in Nelco Limited Vs. Union of India and an unreported judgment of the High Court in Heritage Lifestyles and Developers and Private Limited Vs. The Union of India. They argued that the Heritage Lifestyles judgment directed the respondents to accept TRAN-1 forms and grant credit, implying the time limit was not strictly mandatory. They sought liberty to correct Form TRAN-1 and file Form TRAN-2 for consideration on merits. Revenue's Arguments: The respondents relied on the judgment in Nelco Limited V. Union of India, particularly paragraph 86, to support the constitutional validity of Rule 117 and Section 140(1), asserting that these provisions are intra vires. They did not present arguments against the other petitioners who had not filed any forms for claiming credit.