Ambica Fertiflizers Through Partner Shrikant Dwarkadas Bhutada vs. The Union Of INDIA And Others

Held

The Court, while acknowledging that the challenge to the validity of Section 140 and Rule 117 was negatived in *Nelco Limited*, found that the judgment in *Heritage Lifestyles and Developers and Private Limited* did not hold the provisions to be directory. However, to serve the interest of justice, the Court allowed the petitioner in Writ Petition No. 1690 of 2019 to correct Form TRAN-1 and file Form TRAN-2. The respondents were directed to consider the entertainability of these forms in accordance with Section 140 of the CGST Act and Rule 117(1) of the CGST Rules. The Jurisdictional Assessing Authority was also tasked with considering all issues raised by the petitioner, including the merits, and the effect of the cited judgments, to take an appropriate decision within four weeks. If the petitioner's case was accepted, the reliefs would be granted within a further four weeks; otherwise, the petitioner could pursue further proceedings.

Facts

The petitioners, including Ambica Fertilizers and Balaji Agro Agency, 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 submission and a single revision within the due date. The authorities did not permit correction of the mistake through representation. Other petitioners also faced issues with claiming transitional 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 omission? Petitioner's arguments: The petitioner, relying on the judgment in *Nelco Limited Vs. Union of India* and Section 140, argued that the time prescribed under Rule 117(1) is directory. They further cited an unreported judgment of the Bombay High Court in *Heritage Lifestyles and Developers and Private Limited Vs. The Union of India*, which directed acceptance of TRAN-1 forms and granting of input tax credit, implying the time limit is directory. They sought liberty to correct Form TRAN-1 and file Form TRAN-2. Revenue's arguments: The respondents, relying on the judgment in *Nelco Limited V. Union of India*, particularly paragraph 86, contended that the constitutional validity of Rule 117 and Section 140(1) has been upheld, implying the time limits are mandatory. They argued against the proposition that the provisions are directory.