Shital Agro Through Partner Ramvilas Bhagwandas Mantri vs. The Union Of INDIA And Others

Held

The Court held that while the challenge to the validity of Section 140 and Rule 117 was negatived by this Court in the case of *Nelco Limited*, the specific circumstances of the petitioner in Writ Petition No. 1690/2019 warranted consideration. The Court clarified that the judgment in *Heritage Lifestyles and Developers and Private Limited* did not hold that Section 140 and Rule 117 were directory, but rather allowed the claim if the petitioner was otherwise eligible. To serve 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 the entertainability of these forms in accordance with Section 140 and Rule 117(1). The jurisdictional assessing authority was also directed to consider all issues raised by the petitioner, including the merits and the impact 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.

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. The core issue was their inability to revise or correct Form TRAN-1 after the prescribed due date, leading to the loss of claimed credit. Specifically, Ambica Fertilizers missed claiming approximately Rs. 13,17,956/- due to an inadvertent error in the initial filing of Form TRAN-1. The petitioners argued that the time limits prescribed for filing and revising these forms were not intended to be mandatory and that they should be allowed to rectify their mistakes. The respondents, Union of India and State of Maharashtra, relied on existing judgments upholding the validity of the relevant rules and sections.

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 after the due date? 2. Whether the petitioners, who missed claiming transitional input tax credit due to errors in filing Form TRAN-1, should be granted liberty to correct the form and claim the credit, considering the procedural limitations and the principles of natural justice? Petitioner's arguments: The petitioner contended that the time prescribed under Rule 117(1) is directory, not mandatory, citing the judgment in *Nelco Limited Vs. Union of India* and the unreported judgment in *Heritage Lifestyles and Developers and Private Limited Vs. The Union of India*. They argued that they should be permitted to correct Form TRAN-1 and file Form TRAN-2 to claim their eligible input tax credit, as they were not allowed to rectify their initial mistake. The petitioners also sought to rely on Section 140 and Rule 117(1). 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 explicitly argue on the directory versus mandatory nature of the time limit but rather on the established validity of the rules.