“It would amount to calling upon the petitioner to do something which was not possible electronically post 1 July 2017.” ~HC
In a judgment addressing the intersection of procedural compliance and substantive tax credit rights under the GST transition, the Bombay High Court has held that where electronic filing of revised excise returns was not possible post-introduction of the GST regime, a manual revision cannot be disregarded. The Court quashed the rejection of a revised TRAN-1 claim solely on the ground that the underlying ER-1 return had not been amended electronically.
The Division Bench of Justice M.S. Sonak and Justice Jitendra Jain was seized of a writ petition filed by M/s. Johnson Matthey Chemicals India Pvt. Ltd., assailing an order passed by the Deputy Commissioner, CGST, Raigad Commissionerate, whereby the petitioner’s claim for transition of ₹1.16 crore in CENVAT credit, filed through a revised TRAN-1, was rejected on the ground that the corresponding ER-1 return for the pre-GST period had not been revised electronically.
The petitioner, a manufacturer of industrial catalysts, had originally filed TRAN-1 in August 2017. However, it was later discovered that it had omitted to claim credit for three bills of entry amounting to ₹1,16,29,351 for the months of May and June 2017. Though the error was brought to the department’s notice, the opportunity to correct the TRAN-1 arose only after the Supreme Court’s directions in Union of India v. Filco Trade Centre Pvt. Ltd., which reopened the GST portal for transitional filings until 30 November 2022.
In compliance, the petitioner manually revised its ER-1 return on 23 November 2022 and filed a revised TRAN-1 form. However, this was rejected on the grounds that the ER-1 return had not been filed electronically and that the revised claim exceeded the one-year limit under Rule 4 of the CENVAT Credit Rules, 2004.
Rejecting both objections, the Court observed, “Respondents have not shown us that the excise portal was functional after 1 July 2017 so as to enable an assessee to revise its excise returns filed prior to 1 July 2017.”
It held that no electronic filing mechanism existed post-GST rollout for such revisions, and thus, penalising the petitioner for not complying with an unavailable procedure was untenable.
On the question of limitation, the Court clarified that the petitioner had notified the department within the prescribed one-year period and could not be faulted for the delay in formal submission, which arose due to lack of a functioning portal. It noted, “The petitioner had informed the respondents within a period of one year, vide letter dated 16 February 2018, about the mistake in not claiming the credit in the excise return.”
While referring to the case of Aberdare Technologies Pvt. Ltd. Vs. Central Board of Indirect Taxes & Customs, the Court reaffirmed the Supreme Court’s affirmation that technical lapses, absent any loss of revenue, should not frustrate substantive rights under the GST regime.
Further, while referring to the Gujarat High Court’s judgment in Jekson Vision Private Limited Vs. Union of India., which upheld the validity of manual returns in the face of technical portal issues, stated that “substantive rights cannot be curtailed for mere procedural infirmities.”
Allowing the petition, the Court quashed and set aside the impugned order and directed the respondents to accept the petitioner’s manually filed revised ER-1 return. The Bench further ordered that the transition of ₹1,16,29,351 in CENVAT credit, claimed in respect of the three bills of entry, be permitted and given effect under the GST regime. The entire exercise was directed to be completed within a period of eight weeks from the date of the order.
Case Title: M/s. Johnson Matthey Chemicals India Pvt. Ltd. Vs. Union of India and Ors.
Case No.: Writ Petition No. 15536 of 2023
Coram: Justice M.S. Sona and Justice Jitendra Jain
Advocate for Petitioner: Advs. Priyanka Rathi, Prasad Avhad, and Kuldeep U. Nikam
Advocate for Respondent: Advs. Neeta Masurkar and Harshad Shingnapurkar
Picture Source :
