Claim of CENVAT/ITC shall not be denied on account of non-filing or incorrect filing of Tran-1 by 27.12.2017

Facts of the case:

• The Petitioners are registered under the CGST Act, 2017 and were registered under pre-GST tax regimes.
• On the appointed day i.e. 01.07.2017, they were having input tax credit eligible to be carried forward in Form GST TRAN-1. Due to one or other reason, they either could not load the form electronically or loaded incorrect form which could not be corrected within prescribed time.
• Petitioners contended that unutilized CENVAT/ITC of duty/tax paid under Central Excise/VAT Act is vested right of petitioners and denial of the same would amount to violation of Article 14 (i.e. right to equality) and Article 300A (i.e. No person shall be deprived of his property save by authority of law) of the Constitution.
• They further contended that no Section or Rule of CGST Act, 2017 provides that unutilized ITC would lapse, if TRAN-1 is not filed by due date.

Findings:

• Section 16 of the Act allows the entitlement to take input tax credit in respect of post-GST purchases of goods or services within the due date of filing of GSTR-3B for the month September following the end of the financial year of such purchase or furnishing of the annual return, whichever is earlier. Whereas, Rule 117 allows time-limit only up to 27.12.2017 to claim transitional credit on pre-GST purchases. This discrimination in terms of time-limit to avail input tax credit w.r.t purchases made in pre-GST and post-GST regime is violative of Article 14 of the Constitution.
• Further, Article 300A provides that no person shall be deprived of property saved by authority of law. CENVAT credit earned by the department under Central Excise Law is the property of the taxpayer and it cannot be appropriated by the government for merely failing to file a declaration in the absence of Law in this respect. It could have been appropriated by the government by providing for the same in the CGST Act but cannot be taken away merely by framing Rules in this regard.

Held:

After considering all the findings, the High Court directed the Authorities to permit the Petitioners to file or revise Forms(s) TRAN-1, where it has already filed incorrect TRAN-1 either electronically or manually, on or before 30.11.2019. Respondent authorities are at liberty to verify genuineness of claim of petitioners.

Source: [2019] 111 taxmann.com 27 (Punjab & Haryana) Adfert Technologies (P.) Ltd. v. Union of India