M/S Sotheby's Art Services (India) Pvt Ltd vs. Union Of India And Ors
(Bombay High Court, Maharashtra)

Case Law
Petitioner / Applicant
M/S Sotheby's Art Services (India) Pvt Ltd
Respondent
Union Of India And Ors
Court
Bombay High Court
State
Maharashtra
Date
Jul 3, 2020
Order No.
WP LD-VC No. 100 of 2020
TR Citation
2020 (7) TR 3436
Related HSN Chapter/s
N/A
Related HSN Code
N/A

ORDER

1. Rule.

2. Rule made returnable forthwith.

3. Heard finally by consent of the parties.

4. This petition has been fled under Article 226 of the Constitution of India, for the following reliefs :

(a) Issue a writ of certiorari or any other appropriate writ(s), order(s), direction(s) in the nature of writ of certiorari holding that the time limit provided under the retrospective amendment to Section 140(1) of the CGST Act and MGST Act read with Rule 117 of the CGST Rules and MGST Rules, is only directory in nature and cannot be said to be a mandatory condition for the transition of credits from the erstwhile regime to the new regime;

(b) Issue a writ of mandamus or any other appropriate writ(s), order(s), direction(s) in the nature of mandamus directing the respondents to reopen the GST common portal for fling Form GST TRAN-1 in order to avail the eligible credit in the electronic credit ledger of petitioner. Alternatively, issue writ of mandamus or any other appropriate writ(s), order(s), direction(s) in the nature of mandamus directing the respondents to accept the manual / hard copy of the Form GST TRAN-1 in order to avail the eligible credit in the electronic credit ledger of petitioner;

(c) Issue writ of mandamus or any other appropriate writ(s), order(s), direction(s) in the nature of mandamus directing the respondents to credit the transitional credit to petitioner’s electronic credit ledger;

(d) Ad-interim reliefs in terms of prayer (b) and (c) above till the time the present petition is disposed of;

(e) Issue any other appropriate writ, order or directions as the facts and circumstances of the present case may require.

5. Briefly the facts are as under :

(a) The petitioner is a company incorporated under the Companies Act, 2013 and engaged in conducting auctions in India for its global customers, thereby providing auctioning services.

(b) The petitioner was duly registered under the erstwhile Finance Act, 1994 for providing taxable services under business auxiliary services in terms of the provisions of the said Act.

(c) The provisions of the Finance Act were superseded with the Goods and Services Act (GST) regime w.e.f. 01.07.2017 by enactment of the CGST and MGST Act alongwith rules made thereunder.

(d) Therefore, the petitioner migrated to the GST regime and obtained a GST registration certificate. The petitioner had accumulated Cenvat credit upto 30.06.2017 for the period April-2017 to June-2017 being ₹ 47,96,627.00.

(e) According to the petitioner in terms of Section 140(1) read with Rule 117(1) of the CGST Act and the MGST Act, a person registered under the GST laws is allowed to carry forward the amount of Cenvat credit accumulated under the erstwhile (service tax) regime prior to the GST regime subject to fulfillment of certain conditions given in the proviso to Section 140(1).

(f) Having fled the Service tax returns and crystallized the amount of eligible CENVAT credit, the petitioner attempted to file Form GST TRAN-1 in order to carry forward and transition its accumulated CENVAT credit into the GST regime. Since the statutory time limit to file Form GST TRAN-1 was fixed as 27.12.2017 vide order dated 15.11.2017, the petitioner was unable to file Form GST TRAN-1 on the GST portal. Therefore, according to the petitioner, it was unjustly precluded from fling Form GST TRAN-1 under the GST regime though it fulfilled the conditions prescribed by the proviso to Section 140(1) read with Rule 117(1) of the CGST Act. (g) Hence the present petition.

6. Mr.Bose, learned counsel appearing on behalf of the petitioner submitted that it is settled law that there cannot be a time limit for transition of eligible Cenvat credit into the GST regime as held by the Punjab and Haryana High Court in the case of Adfert Technologies Pvt. Ltd. v. Union of India & Ors. CWP No. 30949 of 2018 (O & M) = 2019-TIOL-2519-HC-P&H-GST. He submitted that the right to transaction of Cenvat credit into the GST regime is an indefeasible right which cannot be curtailed by providing a time limit in terms of Rule 117(1) of the CGST Rules. He submitted that the aforesaid position was thereafter followed in several cases by the following High Courts :-

(i) Mrinal Ghost v. Union of India & Ors. W.P. No. 9821 (W) of 2018 = 2019-TIOL-2676-HC-KOL-GST; Krish Automotors Pvt. Ltd. v. Union of India & Ors. W.P. (C) 3736/2018 = 2019-TIOL-2153-HC-DEL-GST – Hon’ble Delhi High Court;

(ii) M/s. Asian Paints Ltd. & Ors. v. Union of India & Ors. W.P. No. 33290/2019- Hon’ble Karnataka High Court;

(iii) M/s. Kay Ess Surgico v. Union of India & Ors. CWP 37368/2019- Hon’ble Punjab & Haryana High Court;

(iv) Tara Exports v. Union of India & Ors.W.P. (MD)No.18532 of 2018- Hon’ble Madras High Court = 2018-TIOL-2872-HC-MAD-GST;

(v) M/s. Jay Bee Industries v. Union of India & Ors. CWP No. 2169 of 2018 – Hon’ble Himachal Pradresh High Court = 2019-TIOL-2677-HC-HP-GST;

(vi) Gallops Infrastructure Ltd. v. Union of India R/Special Civil Application No. 9237 of 2019 – Hon’ble Gujarat High Court = 2020-TIOL-616-HC-AHM-GST.

7. He submitted that in view of the aforesaid settled legal position, the petitioner approached the jurisdictional officer to request him to accept the manual Form GST TRAN-1 prepared by the petitioner. However, the jurisdictional officer refused to accept the petitioner’s application and directed the petitioner to approach the jurisdictional Nodal Officer. Thereafter the petitioner fled application dated 04.12.2019 with the Nodal Officer i.e. respondent No.5, Joint Commissioner of State Tax, 5th Floor, GST Bhawan, Mazgaon, Mumbai, seeking the carry forward of Cenvat credit amount of ₹ 47,96,627.00 as input tax credit under the GST regime in the electronic credit ledger of the petitioner. He submitted that the Nodal Officer (respondent No.5) forwarded the petitioner’s application to the respondent No.6 i.e. Joint Commissioner of State (EIU), Economic Intelligence Unit, C Wing, Old Building, GST Bhavan, Mazgaon, Mumbai- 400 010 for necessary action. He submitted that thereafter there has been no resolution of the said grievance.

8. We have heard the learned counsels appearing for the petitioner and the learned Government Pleader appearing on behalf of the respondents.

9. At the outset, we feel it apposite to highlight the provisions of Section 140 (1) and Rule 117(1) which is the transitional provision provided for carry forward of Cenvat credit from the erstwhile regime to the new GST regime.

Section 140(1) of the CGST Act reads thus:

“Transitional arrangements for input tax credit.

140.(1) A registered person, other than a person opting to pay tax under section 10, shall be entitled to take, in his electronic credit ledger, the amount of CENVAT credit of eligible duties carried forward in the return relating to the period ending with the day immediately preceding the appointed day, furnished by him under the existing law in such manner as may be prescribed :

Provided that the registered person shall not be allowed to take credit in the following circumstances, namely :-

i. Where the said amount of credit is not admissible as input tax credit under this Act; or

ii. Where he has not furnished all the returns required under the existing law for the period of six months immediately preceding the appointed date; or

iii. Where the said amount of credit relates to goods manufactured and cleared under such exemption notifications as are notified by the Government…”

Rule 117(1) of the CGST Rules reads thus :

“117. Tax or duty credit carried forward under any existing law or on goods held in stock on the appointed day:-

(1) Every registered person entitled to take credit of input tax under section 140 shall, within ninety days of the appointed day, submit a declaration electronially in Form GST TRAN-1, duly signed, on the common portal specifying therein, separately, the amount of input tax credit of eligible duties and taxes, as defined in Explanation 2 to section 140 to which he is entitled under the provisions of the said section:

Provided that the Commissioner may, on the recommendations of the Council, extend the period of ninety days by a further period not exceeding ninety days.

Provided further that where the inputs have been received from an Export Oriented Unit or a unit located in Electronic Hardware Technology Park, the credit shall be allowed to extent as provided in sub-rule (7) of rule 3 of the CENVAT Credit Rules, 2004.

(1A) Notwithstanding anything contained in sub-rule (1), the Commissioner may, on the recommendations of the Council, extend the date for submitting the declaration electronically in Form GST TRAN-1 by a further period not beyond 31st March, 2020 in respect of registered persons who could not submit the said declaration by the due date on account of technical diffiiculties on the common portal and in respect of whom the Council has made a recommendation for such extension.

(2)…”

10. We may state that on a conjoint reading of the aforesaid provisions, namely Section 140(1) read with Rule 117(1), prima facie, it appears that a person is allowed to carry forward Cenvat credit from the erstwhile regime to the GST regime by fling of Form GST TRAN-1. In the present case the petitioner has attempted to file Form GST TRAN-1, although belatedly, but alongwith the applicable late fees in compliance of the erstwhile service tax laws as also the provisions of the CGST Act and MGST Act. The petitioner’s application dated 04.12.2019 is pending adjudication with the appropriate authority i.e. respondent No.6.

11. We may state that the present petition can be disposed of by issuing a direction to the respondent No.6/appropriate authority to consider the application dated 04.12.2019 fled by the petitioner for seeking to carry forward the accumulated Cenvat credit into the GST regime and acceptance of the petitioner’s Form GST TRAN-1 in accordance with law. In doing so respondent No.6 / appropriate authority shall give a hearing to the petitioner and thereafter pass a speaking order on the aforesaid application.

12. In view of the above, Writ Petition is disposed of by the following order :-

(a) respondent No.6 / appropriate authority i.e. Joint Commissioner of State Tax (EIU), Economic Intelligence Unit, C Wing, Old Building, GST Bhavan, Mazgaon, Mumbai- 400 010 is directed to decide the application dated 04.12.2019 fled by the petitioner for seeking to carry forward transition of accumulated Cenvat credit into GST regime in accordance with law;

(b) respondent No.6 / appropriate authority shall accord an opportunity of hearing to the petitioner before deciding and passing order on the petitioner’s application dated 04.12.2019;

(c) respondent No.6 / appropriate authority is directed to decide the application dated 04.12.2019 and pass appropriate speaking order in accordance with law as expeditiously as possible and in any event within a period of 8 weeks from today;

(d) parties to bear their own cost.

13. Writ Petition is disposed of in the above terms.

14. This order will be digitally signed by the Personal Assistant / Private Secretary of this Court. All concerned to act on production by fax or email of a digitally signed copy of this order.

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