Facts of the Case

Alpha Drugs, represented by its Managing Partner Sri. Dipu G. Nair, is a registered dealer under the provisions of the Central Goods and Services Tax Act, 2017 and the Kerala State Goods and Services Tax Act, 2017. The petitioner's claim for transitional input tax credit to the extent of Rs.7,43,967/- was denied vide Ext.P2 order dated 27.02.2023 passed under Section 140 of the GST Acts, and consequential recovery proceedings were initiated vide Ext.P3 order dated 31.03.2023 passed under Section 73 of the GST Acts. Both orders were admittedly appealable, but the petitioner approached the Kerala High Court by way of writ petition instead of filing a statutory appeal, on the ground that the GST portal's module for claiming transitional credit had been closed, making it impossible to upload the appeal electronically. The matter was heard and disposed of on 04.10.2023.

Issues Involved

  1. Whether the petitioner could invoke writ jurisdiction instead of the statutory appellate remedy under Section 107 of the GST Act on account of the online appeal module being unavailable.
  2. Whether the appellate authority should be directed to consider a manually filed appeal on merits without raising the question of limitation.
  3. Whether the recovery order (Ext.P3) could also be assailed together with the primary denial order (Ext.P2).

Petitioner's Arguments

  • The Ext.P2 order denying transitional credit of Rs.7,43,967/- and the consequential Ext.P3 recovery order under Section 73 were both unsustainable and required appellate scrutiny.
  • Filing an appeal electronically was not possible because the GST portal's module for claiming/appealing transitional credit had been closed, effectively foreclosing the functional remedy.
  • Given this practical impossibility, the writ court's intervention was necessary to preserve the petitioner's right to appeal.
  • Reliance was placed on a series of judgments on transitional credit disputes, including decisions of the Madras, Delhi and Kerala High Courts, filed as exhibits in support of the challenge.

Respondent's Arguments

  • Learned counsel for the Revenue submitted that the petitioner could file the appeal against the Ext.P2 order manually, since the electronic route was unavailable.
  • No substantive defence of the denial of transitional credit was advanced; the Revenue's position was confined to indicating the manual-filing route as a workable alternative.

Court Order/Findings

  • Accepting the Revenue's submission, the petitioner's counsel agreed to file a manual appeal under Section 107 of the GST Act before the appellate authority.
  • The Court disposed of the writ petition with liberty to the petitioner to file a manual appeal against the Ext.P2 order within 15 days, directing that the appeal be considered and decided on its merits without going into the question of limitation.
  • The petitioner was further permitted to impugn the Ext.P3 order insofar as it concerned recovery of the transitional credit of Rs.7,43,967/-.
  • The appellate authority was directed to decide the appeal expeditiously.

Important Clarification

  • Where technical constraints on the GST portal make it impossible to file a statutory appeal electronically, the High Court may direct that a manual appeal be entertained without raising a limitation objection.
  • A consequential recovery order passed alongside a primary demand/denial order can be challenged together with the primary order in the same statutory appeal.
  • Writ jurisdiction under Article 226 is ordinarily withheld where a statutory appellate remedy under Section 107 exists, unless a genuine procedural impossibility is demonstrated.

Sections Involved

  • Section 140, CGST/SGST Act, 2017 – governs transitional arrangements for input tax credit carried forward from the pre-GST regime.
  • Section 73, CGST/SGST Act, 2017 – provides for determination of tax not paid, short paid, or input tax credit wrongly availed, in cases not involving fraud or wilful misstatement.
  • Section 107, CGST/SGST Act, 2017 – provides the statutory appellate remedy against orders passed by an adjudicating authority.

Decision – In Favour of

Disposed of with directions, in part in favour of the Assessee. The Court did not adjudicate the merits of the denial of transitional credit, but granted the petitioner procedural relief by permitting a manual appeal to be filed and decided on merits without a limitation bar, and by allowing the recovery order to be challenged in the same appeal.

Related Case Laws

No directly on-point case notes are currently published on this site.

Case Details

  • Court: High Court of Kerala at Ernakulam
  • Case No.: WP(C) No.16507 of 2023
  • CNR: Not available on record
  • Coram: Hon'ble Mr. Justice Dinesh Kumar Singh
  • Decision Date: 04.10.2023
  • Disposal Nature: Disposed of with liberty to file manual appeal under Section 107 of the GST Act

Link to Download the Order

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