Uninav Developers PVT LTD. vs. Union Of INDIA & Ors.

Held

The Court held that the Petitioner is entitled to claim the CENVAT credit of Rs. 36,28,099/-. The Court found merit in the Petitioner's contention that if they were unable to even connect with the server, the system might not register the failed attempt. The Court reiterated its previous observations in cases like Bhargava Motors v. Union of India and Kusum Enterprises Pvt. Ltd. v. Union of India, stating that the GST system is still in a 'trial and error' phase and it is unreasonable to expect assessees to comply when they cannot even connect to the system due to network or other failures. The Court urged the ITGRC to review its policy to acknowledge instances where petitioners cannot link with the portal, leading to technical glitches not being accounted for in the system. The Court directed the respondents to either open the portal for the Petitioner to file TRAN-1 electronically or accept a manually typed TRAN-1 Form by August 31, 2019. The Petitioner's claim would then be processed in accordance with the law.

Facts

The petitioner, Uninav Developers Pvt Ltd., filed a writ petition challenging the inability to claim CENVAT credit amounting to Rs. 36,28,099/- through Form TRAN-1 due to technical glitches on the GST portal. The petitioner contended that they were unable to even connect to the portal to submit the return, receiving an 'error occurred in submit' message. The respondents acknowledged the existence of technical glitches and the formation of an IT Grievance Redressal Committee (ITGRC) to address such issues. The petitioner's case was considered by the ITGRC, which categorized it under 'Cases in which TRAN-1 filing attempted for the first time or revision was attempted but no error/no valid error reported'. The respondents noted that re-filing was permitted in cases with evidence of system failure, but not in others without such evidence.

Key Issues

1. Whether the Petitioner is entitled to claim CENVAT credit of Rs. 36,28,099/- through Form TRAN-1 despite being unable to file it electronically due to technical glitches, as per Section 140 of the CGST Act, 2017 and Rule 117 of the CGST Rules, 2017? Petitioner's Arguments: The petitioner argued that their eligibility for CENVAT credit was not disputed by the respondents. They contended that the credit represented a service tax refund from the pre-GST regime, which needed to be carried forward. The inability to file TRAN-1 was due to technical failures on the portal, preventing even connection, and therefore, the fault lay with the system, not the petitioner. They relied on the principle that the GST system is in a 'trial and error' phase. Respondents' Arguments: The respondents pointed to the ITGRC's classification of the petitioner's case and highlighted that re-filing was permitted only when there was evidence of system failure. They implicitly argued that in the absence of such demonstrable evidence, the petitioner could not be granted relief.