Facts of the Case

The petitioner, M/s Mahavir Auto Diagnostics Pvt. Ltd., approached the Telangana High Court by filing a writ petition under Article 226 of the Constitution of India.

The petitioner had originally sought, inter alia, a declaration that the time limit prescribed for filing Form GST TRAN-3 under Clauses 3 and 4 of Notification No. 21/2017-Central Excise (N.T.) dated 30.06.2017 was ultra vires Section 37 of the Central Excise Act, 1944 and Rule 15 of the CENVAT Credit Rules, 2017. The petitioner also challenged the prescribed limitation as arbitrary and unreasonable and as violating Articles 14, 19(1)(g), and 265 of the Constitution of India.

The petitioner further sought a declaration that closure of the facility for filing Form GST TRAN-3 on the common GST portal was illegal. Additional reliefs were sought for credit of Rs. 1,22,06,002/- to the petitioner’s Electronic Credit Ledger, alternatively for refund of the accrued pre-GST credit, or permission to claim the credit through Form GSTR-3B.

However, during the hearing, learned counsel for the petitioner confined the relief to prayer (b), namely, the challenge to the action of the respondents in closing the facility on the common GST portal for filing Form GST TRAN-3.

The Central Government had issued Notification No. 21/2017-Central Excise (N.T.) dated 30.06.2017 in exercise of powers conferred under sub-rule (2) of Rule 15 of the CENVAT Credit Rules, 2017.

Under the notification, a manufacturer registered under the Central Excise Act, 1944, evidencing payment of excise duty specified in the First Schedule to the erstwhile Central Excise Tariff Act, 1985 on goods manufactured and cleared before 01.07.2017, could issue a Credit Transfer Document to a person who was not registered under the Central Excise Act, 1944 but was registered under the Central Goods and Services Tax Act, 2017 and held such manufactured goods in stock on the specified date.

Under Clause 3 of the notification, the manufacturer issuing the Credit Transfer Document was required to submit relevant details in Table 1 of TRAN-3 on the common portal within 60 days from the appointed date. Under Clause 4, a dealer availing credit on a Credit Transfer Document was required to submit the details in Table 2 of TRAN-3 on the common portal within the prescribed period.

The petitioner was a dealer availing credit on the basis of a Credit Transfer Document. The appointed date was 01.07.2017. The petitioner could not upload the details in Form GST TRAN-3 within the prescribed period because of technical glitches, leading to the filing of the writ petition.

Issues Involved

  1. Whether the petitioner could be denied the opportunity to file Table 2 of Form GST TRAN-3 merely because the prescribed period had expired when the petitioner claimed that filing could not be completed due to technical glitches.
  2. Whether closure of the facility for filing Form GST TRAN-3 on the common GST portal justified intervention under Article 226 of the Constitution of India.
  3. Whether the principles emerging from the Supreme Court decision in Union of India vs Filco Trade Centre Pvt. Ltd., 2022 SCC OnLine SC 912, concerning reopening of the GST portal for transitional credit claims through TRAN-1 and TRAN-2, could support appropriate relief in relation to the petitioner’s TRAN-3 claim.
  4. Whether the petitioner should be allowed to upload Table 2 of Form GST TRAN-3, subject to verification by the respondents.

Petitioner’s Arguments

The petitioner’s principal case was that it was unable to upload the required details in Form GST TRAN-3 within the prescribed period because of technical glitches.

The petitioner originally questioned the validity of the time limitation contained in Clauses 3 and 4 of Notification No. 21/2017-Central Excise (N.T.) dated 30.06.2017 and contended that the limitation was ultra vires Section 37 of the Central Excise Act, 1944 and Rule 15 of the CENVAT Credit Rules, 2017.

The petitioner had also contended that the prescribed time restriction was arbitrary, unreasonable, and violative of Articles 14, 19(1)(g), and 265 of the Constitution of India.

Further, the petitioner challenged the action of closing the facility for filing Form GST TRAN-3 on the common GST portal as illegal.

At the stage of hearing, however, learned counsel for the petitioner expressly confined the case to prayer (b), concerning closure of the facility on the common portal for filing Form GST TRAN-3.

Respondents’ Arguments

Respondent Nos. 1 and 3 filed a counter affidavit opposing the petitioner’s plea.

The respondents contested the relief sought by the petitioner. However, the High Court observed that it was not necessary to delve deeply into the rival contentions in view of the Supreme Court’s directions in Union of India vs Filco Trade Centre Pvt. Ltd., 2022 SCC OnLine SC 912.

Court Order / Findings

The Telangana High Court took note of the Supreme Court’s decision in Union of India vs Filco Trade Centre Pvt. Ltd., 2022 SCC OnLine SC 912.

The High Court observed that, in Filco Trade Centre, the Supreme Court had directed the Goods and Services Tax Network to open the common portal for filing the concerned forms for availing transitional credit through TRAN-1 and TRAN-2 for a specified period. The period referred to in the judgment was from 01.09.2022 to 31.10.2022 and was subsequently extended to 30.11.2022.

The Supreme Court had further directed GSTN to ensure that there were no technical glitches during the extended period. The concerned officials were given 90 days thereafter to verify the veracity of the transitional credit claims and pass appropriate orders. The Supreme Court also directed that allowed transitional credit should be reflected in the Electronic Credit Ledger.

Following the above principle, the Telangana High Court held that it would be in the interest of justice to permit the petitioner to upload Table 2 of Form GST TRAN-3 within the aforesaid period.

The Court expressly clarified that such filing would remain subject to due verification by the respondents.

Only after due verification could the benefit be extended to the petitioner.

Accordingly, the writ petition was disposed of. Pending miscellaneous applications, if any, were closed. No order as to costs was passed.

Important Clarification

The High Court did not grant automatic or unconditional transitional credit of Rs. 1,22,06,002/- to the petitioner.

The relief granted was limited to permitting the petitioner to upload Table 2 of Form GST TRAN-3 within the relevant extended period.

The petitioner’s entitlement to the benefit remained expressly subject to due verification by the respondents.

Therefore, the judgment distinguishes between:

  • permitting procedural access to file the transitional credit form; and
  • final substantive allowance of the transitional credit claim.

The filing opportunity did not itself amount to final acceptance of the credit. The benefit could be extended only after verification of the petitioner’s claim by the competent authorities.

It is also important that, during the hearing, the petitioner confined its case to prayer (b), relating to closure of the GST portal facility for filing Form GST TRAN-3. Therefore, the Court did not finally adjudicate all the wider constitutional and vires challenges originally raised against the prescribed time limit.

Sections / Statutory Provisions Involved

  • Article 226 of the Constitution of India
  • Article 14 of the Constitution of India
  • Article 19(1)(g) of the Constitution of India
  • Article 265 of the Constitution of India
  • Section 37 of the Central Excise Act, 1944
  • Rule 15 of the CENVAT Credit Rules, 2017
  • Rule 15(2) of the CENVAT Credit Rules, 2017
  • Notification No. 21/2017-Central Excise (N.T.) dated 30.06.2017
  • Central Goods and Services Tax Act, 2017
  • Form GST TRAN-3
  • Table 1 of TRAN-3
  • Table 2 of TRAN-3
  • Credit Transfer Document provisions
  • Section 151 of the Code of Civil Procedure, 1908, as referred to in the interlocutory prayer

Link to Download the Order https://www.mytaxexpert.co.in/uploads/1783328413_1231compressed.pdf

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