Kisan Traders Through Proprietor vs. The Union Of INDIA And Others

Held

The Court acknowledged that the challenge to the validity of Section 140 and Rule 117 was negatived in the *Nelco Limited* case. However, regarding the *Heritage Lifestyles and Developers* judgment, the Court clarified that it did not hold Section 140 and Rule 117 to be directory. Nevertheless, in the interest of justice, the Court allowed the petitioner in WP No. 1690/2019 to correct Form TRAN-1 and file Form TRAN-2, without prejudice to the rights and contentions of both parties. The respondents were directed to consider whether these forms could be entertained in accordance with Section 140 and Rule 117(1). The Jurisdictional Assessing Authority was also instructed to consider all issues raised by the petitioner, including merits, and the effect of the *Heritage Lifestyles* and *Nelco Limited* judgments, to take an appropriate decision within four weeks. If the petitioner's case was accepted, the reliefs would be granted within four weeks thereafter. Otherwise, the petitioner was at liberty to file appropriate proceedings.

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 WP No. 1690/2019, 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, and their subsequent representation for correction was not allowed. Other petitioners also faced issues with claiming transitional credit. The core of the dispute revolves around the eligibility and procedural requirements for claiming this credit under the GST law.

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, in light of the petitioner's inadvertent omission? 2. Whether the petitioners are entitled to claim transitional input tax credit despite not strictly adhering to the prescribed timelines and procedural requirements for filing Form TRAN-1 and TRAN-2? Petitioner's arguments: The petitioner, through their counsel Mr. Patkar, argued that the time prescribed under Rule 117(1) is directory, not mandatory, relying on the judgment in *Nelco Limited Vs. Union of India* and Section 140. They also cited an unreported judgment in *Heritage Lifestyles and Developers and Private Limited Vs. The Union of India*, where the Court directed acceptance of TRAN-1 forms and grant of credit. The petitioner sought liberty to correct Form TRAN-1 and file Form TRAN-2. Revenue's arguments: The respondents, represented by Mr. Talhar (ASG) and Mr. Dawalkar, strongly relied on the judgment in *Nelco Limited V. Union of India*, particularly paragraph 86, to assert the constitutional validity of Rule 117 and Section 140(1), implying the time limits are mandatory.