CENVAT credit: Delhi HC asks GST authority to ensure facilitation of claim filing by Friday

Shishir Sinha New Delhi | Updated on June 18, 2020

A file photo of the Delhi High Court.   -  KSL

Also asks tax administration to publicise matter widely

The Delhi High Court has asked the Goods & Services Tax (GST) administration to open the portal for submission of transitional credit claims, and report compliance by Friday.

Transitional credit (also known as CENVAT credit) refers to the use of tax credit accumulated up to June 30, 2017, the last day of the erstwhile central excise and service tax regime. After many changes, the government permitted submission of the declaration electronically in Form GST TRAN-1, but not beyond December 31, 2019.

However, many assessees alleged that technical glitches at the tax department end prevented them from claiming the transitional credit, and approached the court. The Delhi HC has ruled in three matters including the latest, in favour of assessees.

June 30 deadline

On May 5, the High Court permitted not just the petitioner but other assessees also to file claims by June 30. After that the Centre notified amendments on May 16. Accordingly, the power to prescribe a time limit for filing of TRAN-1 has been provided by the insertion of the words ‘within such time’ in Section 140, with retrospective effect from July 1, 2017.

It has been argued that now that the amendment specifically provides for prescribing a time limit for filing of the TRAN-1 Form, the period so provided under Rule 117 would have legal sanctity. Therefore, the factor which weighed with the court to hold (in its May 5 decision) that the limitation period provided under Rule 117 for filing TRAN-1 is merely directory and not mandatory, no longer holds good.

However, on June 16, the High Court said that since the amendment was notified after the assessees approached the court, the May 5 ruling would continue to ‘apply with full rigour’.

Then, in the latest matter with Mangla Hoists as a petitioner, the court said the judgement dated May 5 has not been stayed so far and, therefore, the respondents (tax administration) are under an obligation to abide by the directions issued by adequately publicising the said decision and uploading it on their website, as also by opening their common portal to enable the petitioner and all similarly placed parties to upload Form GST Trans-1 to claim CENVAT credit.

June 30 deadline

“The respondents are directed to ensure compliance of the captioned judgment by June 19, particularly since the cut-off date fixed by the court in the said case is 30th June, 2020, which would leave only 10 clear days for the petitioner and similarly placed assessees to take necessary steps,” the court said.

The petitioner of the latest case expressed surprise that the tax administration has not complied with the May 5 ruling, adding that the petitioner has been compelled to approach the court seeking directions to the respondents to open the common portal in time.

In its response, the lawyer for the tax administration first informed the court that the petitioner had made the wrong jurisdiction as a party in the matter. Also, the tax administration has decided to challenge the May 5 judgment and is in the process of filing an appeal before the Supreme Court.

Published on June 18, 2020

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