Gajanan Krushi Bhandar Through Proprietor Ganesh Manikrao Shengule vs. The Union Of INDIA And Others

Held

The Court held that the challenge to the validity of Section 140 and Rule 117 was negatived by this Court in the case of *Nelco Limited*. However, considering the interest of justice, the Court allowed the petitioner in Writ Petition 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 the corrected Form TRAN-1 and other forms filed/corrected by the petitioner could be entertained in accordance with Section 140 of the CGST Act, 2017, and Rule 117(1) of the CGST Rules, 2017. The Jurisdictional Assessing Authority was also directed to consider all issues raised by the petitioner, including the merits, and the effect of the judgments in *Heritage Lifestyles and Developers and Private Limited* and *Nelco Limited*. A decision was to be taken within four weeks, with communication within one week. If the petitioner's case was accepted, reliefs were to be granted within four weeks; otherwise, the petitioner was at liberty to file appropriate proceedings. The Court clarified that the *Heritage Lifestyles* judgment did not hold that Section 140 and Rule 117 were directory.

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 an amount of approximately ₹13,17,956/- in Form TRAN-1. They contended that there was no option to revise Form TRAN-1 after December 27, 2017, and that their subsequent representation to correct the mistake was not allowed. The petitioners argued that Rule 117 and Rule 120A of the Central Goods and Services Tax Rules, 2017, were invalid to the extent they barred such corrections. Other petitioners had not filed any forms for claiming 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, concerning the petitioner's claim for transitional input tax credit under Section 140 of the CGST Act, 2017. Petitioner's Arguments: The petitioner 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 *Heritage Lifestyles and Developers and Private Limited Vs. The Union of India*. They contended that they missed out on claiming credit due to a mistake and sought permission to correct Form TRAN-1 and file Form TRAN-2. They submitted that the respondents had not entertained their application for correction. Revenue's Arguments: The respondents, represented by the Assistant Solicitor General and AGP, strongly relied on the judgment in *Nelco Limited V. Union of India*, particularly paragraph 86, to support their submission that the constitutional validity of Rule 117 and Section 140(1) was upheld as intra vires, implying the time limits are mandatory.