In a significant ruling granting relief to all GST taxpayers, a two-judge bench of the Delhi High Court has directed the Central Government to allow the taxpayers to claim an input tax credit under Form GST TRAN-1 till 30th June 2020 since the statutory time limit for the same is a directory and therefore, the period of limitation of 3 years under the Limitation Act would apply.
The bench comprising Justice Sanjeev Narula and Justice Vipin Sanghi was considering a bunch of petitions were the petitioners, contended that the Input tax credit is the property and the same cannot be deprived without the Authority of law in terms of Article 300A of the Constitution. There is no substantive provision in the GST Act to deprive the claim on the basis of the period of making the claim, the petitioners argued.
It was further contended that the limitation period provided under the Rules and not the Act and no penal consequences and the same is a directory. It was further contended that in the absence of a period of limitation being provided under the Statute, the general period of limitation of 3 years should be held to apply for making a claim.
Accepting the contentions, the bench observed that the provisions of Rule 117 as being directory in nature, insofar as it prescribes the time-limit for transitioning of credit and therefore, the same would not result in the forfeiture of the rights, in case the credit is not availed within the period prescribed.
“Transitory provisions, as the word indicates, have to be given its due meaning. The transition from pre-GST Regime to GST Regime has not been smooth and therefore, what was reasonable in ideal circumstances is not in the current situation. In absence of any specific provisions under the Act, we would have to hold that in terms of the residuary provisions of the Limitation Act, the period of three years should be the guiding principle and thus a period of three years from the appointed date would be the maximum period for availing of such credit,” the bench said.
Transition Form or TRAN-1 is filed by those taxpayers who are eligible to claim the credit on the tax already paid in the pre-GST regime. In order to claim the complete amount as a credit, TRAN-1 is to be filed along with the particulars of stock carried forward.
The judgment is a great relief to all those who could not file TRAN-1 and claim the input tax credit as the direction would apply in rem, said Advocate Ruchir Bhatia, the counsel appeared for one of the petitioners.
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