HC, Kerala: Allowed to upload TRAN-1 despite failure to log into system on or before prescribed cut-off date

By:

The Hon’ble HC, Kerala in the matter of A.F. Babu vs Union of India [WP(C). No. 27940 of 2019(N) & WP(C). No. 28343 of 2019(P) dated December 13, 2019] allowed the Petitioners to upload form TRAN -1 despite the fact that the Petitioners did not attempt to log into system on or before the prescribed cut-off date to file Form TRAN-1 i.e., December 27, 2017

Facts:

A.F. Babu (“the Petitioner”) came across a press release by GST Council, which indicated that the last date for uploading the details in the GST portal for the purpose of carrying forward the accumulated credit from erstwhile regime was extended up to December 31, 2017. Relying on the said press release, the Petitioners sought clarification from GST Network, on finding that the web portal had closed by December 27, 2017, as to when the portal would re-open again for them to upload the necessary details for migration of the credit to the GST regime.

Further, the Petitioners made the complaints with regard to system error and the alleged inability of Petitioner to upload the necessary details for carrying forward the credit earned by them under the erstwhile regime to the GST regime on or before December 27, 2017

The Respondents however clarified that inasmuch the Petitioners had not made any attempt to log into the system before December 27, 2017 their request for migration of credit could not be accepted (“Impugned communication”).

Issue:

Whether the Petitioners should be allowed to file Form TRAN -1 either manually or electronically.

Held:

The Hon’ble HC, Kerala in WP(C). No. 27940 of 2019(N) & WP(C). No. 28343 of 2019(P) dated December 13, 2019 held as under:

  • Petitioner cannot be deprived of the substantive benefit merely on account of a technical procedure insisted upon by the Respondents. Also, they had valid reason to assume that the facility to upload the necessary TRAN-1 Form was available till December 31, 2017.
  • Relied on the case of Hon’ble HC, Delhi Aman Motors Versus Union of India & Ors. [2019 (11) TMI 1249], where in almost similar circumstances, the Court permitted the Petitioners therein to file a Form TRAN-1 electronically on or before a specified date.
  • Allowed writ petitions by quashing the Impugned communications and directing the Respondents to either open the online portal so as to enable the Petitioners to file the Form TRAN-1 electronically or to accept the same manually on or before December 31, 2019.
  • Directed Respondents to facilitate the filing of these Forms TRAN-1 electronically by making the necessary arrangements in the web portal, an insistence on manual filing shall be only in circumstances where the electronic filing is not possible.

Relevant provisions:

Section 140 of the Central Goods and Services Tax Act, 2017:

“140. Transitional arrangements for input tax credit.

(1) A registered person, other than a person opting to pay tax under section 10, shall be entitled to take, in his electronic credit ledger, the amount of CENVAT credit of eligible duties carried forward in the return relating to the period ending with the day immediately preceding the appointed day, furnished by him under the existing law in such manner as may be prescribed:

Provided that the registered person shall not be allowed to take credit in the following circumstances, namely:-

(i) where the said amount of credit is not admissible as input tax credit under this Act; or

(ii) where he has not furnished all the returns required under the existing law for the period of six months immediately preceding the appointed date; or

(iii) where the said amount of credit relates to goods manufactured and cleared under such exemption notifications as are notified by the Government.

Section 140 of the Central Goods and Services Tax Act, 2017:

117. Tax or duty credit carried forward under any existing law or on goods held in stock on the appointed day.-

(1) Every registered person entitled to take credit of input tax under section 140 shall, within ninety days of the appointed day, submit a declaration electronically in FORM GST TRAN-1, duly signed, on the common portal specifying therein, separately, the amount of input tax credit 1[of eligible duties and taxes, as defined in Explanation 2 to section 140] to which he is entitled under the provisions of the said section:

Provided that the Commissioner may, on the recommendations of the Council, extend the period of ninety days by a further period not exceeding ninety days.

Provided further that where the inputs have been received from an Export Oriented Unit or a unit located in Electronic Hardware Technology Park, the credit shall be allowed to the extent as provided in sub-rule (7) of rule 3 of the CENVAT Credit Rules, 2004.