Jai Enterprises Th. Its Proprietor Jai Kunwar Singh vs. Union Of INDIA Th. Principal Secretary, Ministry Of Revenue

Facts

The petitioner, Jai Enterprises, sought to carry forward Rs. 33,55,295/- from its Cenvat account credit to the GST regime, which commenced on July 8, 2017. Instead of filing the prescribed TRAN-1 form, the petitioner submitted a GSTR-3B return. The Assistance Commissioner, State Taxes (Technical) Jammu, vide an order dated March 7, 2019, rejected the petitioner's claim, stating that the non-filing of TRAN-1 was not due to a technical glitch. The petitioner argued that due to a lack of awareness of the procedure, TRAN-1 was not filed within the stipulated time, but the credit was reflected in the GSTR-3B filed within the period. The respondents did not dispute the entitlement to the credit or its amount, only the non-submission of TRAN-1. The petitioner also stated that the TRAN-1 portal was closed.

Held

The Court held that the petitioner cannot be deprived of the benefit of claiming the credit lying in its account on the stipulated date solely on the basis of procedural or technical wrangles, particularly when the petitioner had reflected the said credit in its GSTR-3B return. The Court referred to paragraph 14 of the Adfert Technologies Pvt. Ltd. case, which stated that unutilized credit arising from duties/taxes paid under erstwhile Acts is a vested right and cannot be taken away on procedural or technical grounds. The Court noted that the respondents had not disputed the petitioner's entitlement to the credit or the correctness of the amount, nor had they disputed that the credit was reflected in the GSTR-3B filed within the stipulated time. The Apex Court had not interfered with the Adfert Technologies judgment. Therefore, the Court directed the respondents to permit the petitioner to submit the TRAN-1 form, either electronically or manually, on or before March 15, 2021.

Key Issues

1. Whether the petitioner can be deprived of carrying forward unutilized Cenvat credit amounting to Rs. 33,55,295/- solely on the ground of non-submission of the TRAN-1 form within the prescribed period, despite reflecting the credit in the GSTR-3B return, under Section 140 of the CGST Act, 2017? Petitioner's Contention: The petitioner argued that they should not be denied the benefit of carrying forward the credit due to procedural or technical reasons, especially since the credit was reflected in their GSTR-3B return filed within the stipulated time. They relied on the decision in Adfert Technologies Pvt. Ltd. & Ors. v. Union of India & Ors. (2019) SCC Online P&H 5701, which held that unutilized credit is a vested right that cannot be taken away on procedural grounds. The petitioner also stated that the TRAN-1 portal was closed. Revenue's Contention: The respondents' primary objection was that the TRAN-1 form was not submitted within the prescribed period. They argued that the petitioner was required to submit TRAN-1 within the time prescribed, and while they submitted GSTR-3B, they could reverse it and proceed with submitting TRAN-1.