Madras High Court Allows Form GST TRAN – 1 to Be Filed Due To Technical Glitches

Madras High Court Allows Form GST TRAN – 1 to Be Filed Due To Technical Glitches

The Madras High Court directed tax authorities to do what was required in order to enable the Petitioner to file Form GST TRAN – 1, which they originally could not upload due to technical difficulties.

A Single Judge Court of Justice J Nisha Banu in the High Court of Madras, dealt with this matter titled as TVL Innovative Motors v. The Goods and Service Tax Council & Ors.

The petition was filed to direct the Respondent – Authorities to reopen the GST Portal and to further enable Petitioner – Company to file Form GST TRAN – 1 by allowing access to the portal. The Petitioner – Company was engaged in sale of Yamaha motorcycles and had certain unutilised amounts in its tax credit. Under the new tax regime i.e. Goods and Service Tax implemented in the year 2017, the credits as were liable to be transitioned and carried forward, for which purpose a Form in TRAN-1 and 2, was to be uploaded in the portal of the Department.

The Petitioner – Company submitted that it had been filing regular monthly returns, but it was unable to seek the benefit of carry forward credit due to technical glitches, since TRAN-1 form was not uploaded in time. It was contended by the Petitioner that the denial of legitimate claim by restricting the Petitioner from filing TRAN-1 was highly unjustified and against the principles of natural justice.

The Respondent – Authorities, on the other hand, contended that Petitioner's negligence resulted in its own failure to utilize the sufficient time provided by the Government to carry forward the input tax credit to the new GST regime. It was further submitted by the Respondent – Authorities that the facility extended by the Government for filing TRAN-1 was withdrawn with effect from 28 December, 2017 and therefore, the Petitioner was not entitled to avail the input tax credit.

A requirement was brought to the notice of this Court, which was made through a circular dated 3 April, 2018, through which the onus was put upon the assessee to establish a demonstrable glitch in the portal like collecting evidence of difficulty/technical glitch. However, the judge was unable to understand as to how the assessee would have anticipated this requirement in order to collect proof by way of screen shots and otherwise establish the factum of technical glitches.

The Court noted the submissions of both parties and found that the officials of the Department of Goods and Service Tax were well aware of the existence of such glitches. It was further noted that the Petitioner had been diligent in making efforts to open the portal and upload the forms.

The judge pointed out Rule 113 of the Central Goods and Service Tax Rules, 2017 (CGST Rules) which had extended the due date for uploading of TRAN Declaration Form to 31 March, 2019 through a notification issued by the Central Board of Excise Customs. The Court allowed this writ petition by directing the Respondent – Authorities to do the needful to enable the Petitioner to upload the requisite forms but it made the following concluding remarks regarding Rule 113:

"Though Goods and Services Tax has been introduced to streamline multiple revenue enactments, the mass litigation that Rule 117 has generated, has defeated the very object and purpose of the enactment. Transition, by itself, does not vest any right in the assessee. It is only utilisation of credit that does, and such utilisation is subject to verification and assessment by an Assessing Officer. It is thus vital that the distinction between transition of a credit and utilisation of such credit after verification by an officer is taken note of in the proper perspective."