Balaji Agro Agency Through Proprietor Shivprasad Papalal Chandak 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 interest of justice would be served by allowing the petitioner in Writ Petition No. 1690 of 2019 to correct Form TRAN-1 and file Form TRAN-2. The Court clarified that the *Heritage Lifestyles and Developers and Private Limited* judgment did not hold that Section 140 and Rule 117 were directory, but rather allowed the claim if the petitioner was otherwise eligible. The Court directed the respondents to consider the issue of whether the corrected Form TRAN-1 and any subsequent forms filed by the petitioner could be entertained in accordance with Section 140 of the Central Goods and Services Tax Act, 2017, and Rule 117(1) of the Central Goods and Services Tax 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 cited judgments, and take an appropriate decision within four weeks. If the petitioner's case was accepted, the reliefs sought would be granted within four weeks thereafter.

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 out on claiming approximately Rs. 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 sought permission to correct their TRAN-1 forms and claim the transitional credit, arguing that the prescribed time limits were directory. 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, concerning the petitioner's claim for transitional input tax credit that was inadvertently missed during the initial filing. 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 principle that procedural provisions should not defeat substantive rights. They further relied on an unreported judgment of the Bombay High Court in *Heritage Lifestyles and Developers and Private Limited Vs. The Union of India*, which directed the acceptance of TRAN-1 forms and granting of input tax credit. The petitioner sought liberty to correct Form TRAN-1 and file Form TRAN-2. 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 argue that the constitutional validity of Rule 117 and Section 140(1) has been upheld and that these provisions are intra vires. They did not explicitly address the argument regarding the directory nature of the time limit in their submissions as recorded.