Case Note & Summary
The petitioner, a manufacturer of industrial catalysts, filed a writ petition under Article 226 of the Constitution of India challenging the order of respondent no.3 dated 27 February 2023 rejecting its revised TRAN-1 Form for transitional credit of Rs.1,16,29,351/- under Section 140 of the Central Goods and Service Tax Act, 2017. The petitioner had originally filed TRAN-1 on 26 August 2017 claiming credit of Rs.4,31,30,239/- but later realized it had inadvertently failed to claim credit of Rs.1,16,29,351/- relating to three Bills of entries in the ER-1 return for May/June 2017. The petitioner informed the respondents of this mistake within one year by letter dated 16 February 2018 and sought permission to revise the return manually or by reopening the GST portal. The respondents initially directed reversal of credit by letter dated 7 January 2021, but no credit had been taken. After the Supreme Court's decision in Union of India v. Filco Trade Centre Pvt. Ltd. on 22 July 2022 directing the GST network to reopen the portal from 1 September to 31 October 2022, extended till 30 November 2022, the petitioner filed a manual revised ER-1 return and revised TRAN-1 on 23 November 2022. Respondent no.3 issued a show cause notice on 15 February 2023 and rejected the revised TRAN-1 on 27 February 2023, holding that Circular dated 10 November 2022 only allowed filing/revising TRAN-1 or TRAN-2, not returns under the erstwhile regime, and that revision of excise returns had to be electronic as per Notification No.4 of 2010 dated 19 February 2010. The High Court analyzed the objections and held that post 1 July 2017, the erstwhile excise portal was not functional, making electronic revision impossible; thus manual revision could not be rejected. It further held that the one-year time limit under Rule 4 of Cenvat Credit Rules, 2004 was complied with because the petitioner informed the authorities within one year, and no objection was raised on eligibility. Relying on Aberdare Technologies Pvt. Ltd. v. Central Board of Indirect Taxes & Customs and other decisions, the court concluded that substantive rights cannot be defeated by technical impossibility and that the revised TRAN-1 filed within the Supreme Court's extended timeline must be accepted. The court therefore held that the impugned order could not be sustained and directed respondent no.3 to consider and allow the claim of transitional credit of Rs.1,16,29,351/-.
Headnote
A) Goods and Services Tax - Transitional Credit - Section 140, Central Goods and Service Tax Act, 2017 - Manual Revised Excise Return - Assessee cannot be required to file revised excise return electronically post 1 July 2017 when erstwhile portal non-functional; rejecting claim on such ground would amount to imposing impossible condition - Held that manual revised ER-1 return is acceptable for transition credit (Paras 12-13). B) Goods and Services Tax - CENVAT Credit Time Limit - Rule 4, Cenvat Credit Rules, 2004 - One-year period not a bar when intimation within one year and no revenue loss - Held that the petitioner informed respondents vide letter dated 16 February 2018 within one year of the Bills of entries, and no objection on eligibility was raised; the time limit does not defeat the claim (Paras 14-16). C) Constitutional Law - Judicial Review under Article 226 - Technical requirements cannot defeat substantive right - Supreme Court directions in Filco Trade Centre to reopen TRAN-1 portal must be given effect - Held that the revised TRAN-1 was filed within the time granted by the Supreme Court and cannot be rejected for lack of electronic revision under the erstwhile regime (Paras 5,15-16). D) Precedent - Rectification of Errors - High Court decisions in Aberdare Technologies and others - Assessee permitted to rectify error post statutory period if no loss to revenue - Held that the petitioner is entitled to transitional credit despite technical delay, relying on Aberdare Technologies as confirmed by the Supreme Court (Para 17).
Issue of Consideration
Whether the petitioner could file revised excise return manually when the electronic portal for the erstwhile regime was not functional after 1 July 2017; whether the claim for transitional credit was barred by the one-year time limit under Rule 4 of Cenvat Credit Rules, 2004; whether respondent no.3 could reject revised TRAN-1 on the ground that only TRAN-1/TRAN-2 could be revised, not returns under the erstwhile regime
Final Decision
The High Court held that the impugned order rejecting the revised TRAN-1 for additional credit could not be sustained; manual revised excise return was acceptable due to non-functional electronic portal; the one-year time limit did not bar the claim as the petitioner intimated within one year; directed respondent no.3 to consider and allow the claim of transitional credit of Rs.1,16,29,351/-.
Law Points
- Substantive right to transitional credit cannot be defeated by technical impossibility
- manual filing of revised excise return permissible when electronic portal non-functional after GST
- intimation of mistake within one year under Cenvat Credit Rules preserves claim
- courts may permit rectification post statutory period if no loss to revenue
- Supreme Court directions in Filco Trade Centre to reopen TRAN-1 portal must be honoured
