The Bombay High Court has recently held that the time limit prescribed to file TRAN-1 under Rule 117 of the Goods and Services Tax Rules is not ultra vires of the Central GST Act, 2017.
The petitioner namely Nelco Ltd. is a Company incorporated under the Companies Act. It supplies and undertakes various network-related services. The Petitioner had accumulated CENVAT Credit during its activities and payment of taxes. The Transition Form or TRAN-1 is filed by the taxpayers who are eligible to claim the credit on the tax already paid in the pre-GST regime.
However, the petitioner was unable to file the return TRAN-1 due to some technical difficulties on the common portal. Despite so many requests from the petitioners, no direction was issued to the Respondents to treat the case of the Petitioner as falling within the ambit of Rule 117(1A) of Central Goods and Service Rules.
The Division Bench comprising Justices Nitin Jamdar and M.S Karnik held that “the existence of technical difficulties as seen from the system logs at the common portal is a cogent proof. The system log on the common portal does not support the case of the petitioner. This has been communicated to the Petitioner. No direction was issued to the Respondents to treat the case of the petitioner as falling within the ambit of Rule 117(1A) of Central Goods and Service Rules.”
With regard to the constitutionality of the provision, the Court ruled that “the time limit stipulated under Rule 117 of the Rules is not ultra vires of the Act. This Rule is traceable to the power conferred under section 164(2) of the Act. The time limit stipulated in Rule 117 is in consonance with the transitional nature of the enactment, and it is neither arbitrary nor unreasonable. Availment of input tax credit under section 140(1) is a concession attached with conditions of its exercise within the time limit.”
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