Discrimination in terms of Time Limit to allow availment of ITC is Arbitrary and Unreasonable: Kerala High Court [Read Judgment]

ITC - Kerala High Court - Taxscan

The Kerala High Court ruled that the discrimination in terms of time limit to allow availment of the Input Tax Credit (ITC) is arbitrary and unreasonable.

The Revenue department has assailed the directions of the Single Judge to the IT Redressal Committee of the GST Council to consider the petitioner’s request for the transition of unavailed input tax credit in accordance with the law.

The statement filed by the respondents, M/s Merchem India Pvt. Ltd. that there was an IT-related glitch that was noticed by the Department. The said technical glitch prevented bonafide attempts to comply with the process of filing forms or returns all over the country. It was for this purpose that a Redressal Committee was formed.

The issue raised was technical in nature, it is only in the interest of all that such technical issues do not stand in the way of rendering justice.

Keeping in perspective the contentions in the case, the division bench of Justice S.V. Bhatti and Justice Bechu Kurian Thomas held that the impugned judgment does not reflect any error of law warranting interference by this Court in appeal. In fact, the impugned judgment of the learned Single Judge being an innocuous one and observed that the respondents ought not to have pursued the same in appeal, wasting judicial time and energy.

“It is significant to note that the statute does not provide for any provision for lapsing of unutilized input tax credit for non-filing of TRAN-1. The input tax credit is required by law to be credited to the electronic credit ledger of an assessee. Failure to credit the input tax credit is an infraction of section 140(1) and to Rule 117(3) of the GST Rules. Input tax credit is an asset in the hands of the dealer. A registered dealer had a statutory right under the VAT regime to get a refund. An unutilized input tax credit of the erstwhile regime can be denied from being credited to the electronic credit ledger only under the contingencies mentioned in the proviso to section 140(1). In all other situations, this statutory right cannot be defeated by any procedural rules under the GST regime. In this context, we bear in mind the salutary principles enshrined in Article 265 and Article 300A of the Constitution of India also,” the court said.

“Granting an opportunity of hearing is only to enable the process of decision-making simpler. It is one of the basic principles of natural justice. In the process of rendering justice, an opportunity of hearing is a basic postulate. The challenge now raised by the appellant against the opportunity of hearing directed to be afforded by the learned Single Judge in the impugned judgment is therefore not tenable,” the court added.

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