Facts of the Case

The present intra-court appeal was filed by the Principal Nodal Officer, GST Department challenging the order dated 01.07.2022 passed in a batch of writ petitions beginning with W.P.A. No. 12239 of 2019, wherein the respondents had questioned the constitutional validity (vires) of Rule 117 of the Central Goods and Services Tax Rules, 2017 and Rule 117 of the West Bengal Goods and Services Tax Rules, 2017 relating to the filing of TRAN-1 and TRAN-2 for claiming transitional input tax credit.

During the pendency of the appeal, the issue had already been considered by the Calcutta High Court in Union of India vs. Baljit Iron Private Limited & Others, which, in turn, relied upon the landmark judgment of the Hon'ble Supreme Court in Union of India & Another vs. FILCO Trade Centre Pvt. Ltd. & Another concerning reopening of the GST portal for claiming transitional credit.

Issues Involved

  1. Whether any further adjudication was required in the appeal challenging Rule 117 of the CGST Rules, 2017 and the WBGST Rules, 2017 after the Supreme Court's decision in FILCO Trade Centre Pvt. Ltd..
  2. Whether taxpayers should be permitted to file or revise TRAN-1 and TRAN-2 irrespective of earlier litigation or technical difficulties.
  3. Whether the appeal deserved disposal in light of the comprehensive directions already issued by the Hon'ble Supreme Court.

Petitioner's Arguments

The appellant (Principal Nodal Officer, GST Department) challenged the order passed by the learned Single Bench in the batch of writ petitions concerning the validity of Rule 117 of the CGST Rules and the corresponding WBGST Rules governing transitional credit.

The appeal sought reconsideration of the issues relating to the claim of transitional input tax credit under the GST regime.

Respondent's Arguments

The respondents relied upon the subsequent developments before the Hon'ble Supreme Court, particularly the judgment in Union of India & Another vs. FILCO Trade Centre Pvt. Ltd. & Another, wherein detailed directions had already been issued for reopening the GST common portal and permitting all eligible taxpayers to file or revise TRAN-1 and TRAN-2.

It was submitted that the controversy stood substantially resolved by the Supreme Court's binding directions, leaving no surviving dispute requiring separate adjudication by the High Court.

Court Order / Findings

The Calcutta High Court observed that the controversy involved in the present appeal was identical to the issue already decided in Union of India vs. Baljit Iron Private Limited & Others, wherein the Court had followed the judgment of the Hon'ble Supreme Court in FILCO Trade Centre Pvt. Ltd.

The Court noted that the Supreme Court had:

  • Directed GSTN to reopen the common portal for filing or revising TRAN-1 and TRAN-2.
  • Allowed every aggrieved registered taxpayer to avail the benefit irrespective of whether a writ petition had been filed or whether the matter had been decided by the IT Grievance Redressal Committee.
  • Directed GSTN to ensure there were no technical glitches.
  • Granted ninety days to the jurisdictional officers for verification of claims after reopening of the portal.
  • Directed that the admissible transitional credit be reflected in the Electronic Credit Ledger after verification.
  • Permitted the GST Council to issue suitable guidelines for verification of such claims.

Since the Supreme Court had comprehensively settled the issue, the High Court held that no further orders were required and accordingly disposed of the appeal along with the connected application in terms of the Supreme Court's directions.

The Court further recorded that by a subsequent order dated 02.09.2022, the Hon'ble Supreme Court extended the period for reopening the GST common portal by a further four weeks.

Important Clarification

  • The judgment reiterates that the benefit of filing or revising TRAN-1 and TRAN-2 was available to all eligible registered taxpayers, irrespective of pending litigation or previous rejection by the IT Grievance Redressal Committee.
  • The High Court merely implemented the binding directions issued by the Hon'ble Supreme Court and did not undertake any independent adjudication on the validity of Rule 117.
  • The decision reinforces that transitional credit claims are to be examined by the proper officers on merits after providing an opportunity of hearing.
  • The Court also acknowledged the subsequent extension granted by the Supreme Court for reopening the GST portal.

 

Sections / Rules Involved

  • Rule 117 of the Central Goods and Services Tax Rules, 2017
  • Rule 117 of the West Bengal Goods and Services Tax Rules, 2017
  • Transitional Input Tax Credit (TRAN-1 & TRAN-2)
  • Electronic Credit Ledger under the GST framework

Link to Download the Order

https://www.mytaxexpert.co.in/uploads/1785391684_2318compressed.pdf

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