# M/s Ratek Pheon Friction Technologies Pvt. Ltd., Noida, Gautam Budh Nagar v. Principal Commissioner, Central G.S.T. Noida & Ors

- **Citation:** (2021) 10 ILRA 781
- **Court:** High Court of Judicature at Allahabad
- **Decided:** 2020-03-17
- **Case number:** Writ Tax No. 477 of 2021
- **Bench:** Naheed Ara Moonis, Saumitra Dayal Singh
- **Source:** https://unisonlegal.in/judgment/allahabad-high-court/m-s-ratek-pheon-friction-technologies-pvt-ltd-noida-gautam-budh-nagar-v-46418
- **Pages:** 36

## Headnote

A. Tax Law - CGST Act,2017 & U.P. GST
Act,2017 - Sections 140 & 174(2)(c) -
Central Goods and Services Tax Act, 2017
- Sections 168 & 168A - Uttar Pradesh
Goods and Services Tax Act, 2017 -
Central Excise Act, 1944 - The Uttar
Pradesh Value Added Tax Act, 2008 - U.P.
Goods and Services Tax Rules, 2017 - Rule
117 & 117 (1)(a) - Indian Income Tax Act,
1922 & Section 24(1) & CGST Rules and
UPGST Rules: Rule 121 -

The first issue for consideration is whether
the ITC is a vested right under the GST
regime. This issue arises in the context of
transition provisions enacted under the CGST
Act read with the CGST Rules. (Para 22)

The legislature did not intend to nullify those
credits earned under the pre-existing laws,
rather, it intended to transition those credits to
the GST regime. That appears to be the plain
object and intent, of section 140 of the CGST &
UPGST Acts. It has also allowed ITC to
unregistered dealers under the preexisting laws,
on tax paid inputs, stocks etc., on the strength
of Tax Invoices. (Para 23, 48)

Thus, u/s 140(1) of the Act, a "registered
person", other than one opting to pay tax by
way of composition levy (u/s 10 of the CGST
Act) has been made entitled to take benefit of
any CENVAT credit of eligible duties that may
have been carried forward on 30 June 2017.
However, by virtue of the plain language of
Section 140 of the Act, that right is subject
(mainly) to fulfilment of two conditions, namely,
782 INDIAN LAW REPORTS ALLAHABAD SERIES
the return for such CENVAT credit of eligible
duty and/or VAT ITC should have been
furnished by a "registered person" under the
pre-existing law/s. In case such person was not
registered under the pre-existing laws, he may
avail ITC on tax paid inputs, stocks etc., against
Tax Invoices. Second, compliance of time and
manner prescribed, is required to be fulfilled.
Importantly, the words "within such time and"
have been inserted by Finance Act, 2020, with
full retrospective effect from 01.07.2013. (Para
25)

As to the prescribed manner, there is no quarrel
between the parties. The petitioners do not
contend, that the details required to be filled up
in the Form were impossible or difficult to be
filled up. The only challenge they raise is based
on their inability to submit electronically that
data on the GST Portal, within time granted.
(Para 48)

Clearly, while enacting the GST law, the
Parliament and the State Legislature were
conscious of the duties and obligations created
under the new law. It is those obligations for
which timeline and manner has been prescribed.
Therefore, the condition within such time and
within such manner, must be read only in
conjunction with the right to avail entitlement to
take into the Electronic Credit Ledger, the
amount of CENVAT credit or ITC. (Para 30)

Thus, the right to avail ITC did not get
vested on the petitioner

## Text

_Characters 0–39,866 of 112,355. This is a partial read: ask again with offset=39866 for what follows._

10 All. M/s Ratek Pheon Friction Technologies Pvt. Ltd., Noida, Gautam Budh Nagar Vs.
 Principal Commissioner, Central G.S.T. Noida & Ors.
781
1944. Thus, the garnishee proceeding
instituted against the petitioners with
respect to duty liability under the Central
Excise Act is wholly without jurisdiction.
For the above reasons, the communications
dated 17.03.2020 and 07.04.2020 issued by
respondent no.6 are set aside. Any amount
that may have been recovered pursuant to
those communications may be refunded
within a period of one month from today.

35. As to the submission of learned
counsel for the petitioners based on the
Business
Transfer
Agreement
dated
14.03.2017, we do not record any
conclusion in that regard and that issue
may
remain
to
be
examined
in
appropriate
proceedings,
at
the
appropriate stage. We further leave it
open to the revenue authorities to initiate
a valid adjudication proceeding with
respect to penalty and interest, if the
limitation to institute such proceeding
otherwise survives today. We make clear,
we have not granted any extension of
limitation
that
may
have
otherwise
expired.

36. Thus, the writ petition stands
partly allowed. No order as to costs.
----------

(2021)10ILR A781
ORIGINAL JURISDICTION
CIVIL SIDE
DATED: ALLAHABAD 15.09.2021

BEFORE

THE HON'BLE NAHEED ARA MOONIS, J.
THE HON'BLE SAUMITRA DAYAL SINGH, J.

Writ Tax No. 477 of 2021
and
Writ Tax No. 225 of 2021
and
Writ Tax No. 872 of 2018
M/s Ratek Pheon Friction Technologies
Pvt. Ltd., Noida, Gautam Budh Nagar
 ...Petitioner
Versus
Principal Commissioner, Central G.S.T.
Noida & Ors. ...Respondents

Counsel for the Petitioner:
Sri Shubham Agarwal, Sri Suyansh Agarwal

Counsel for the Respondents:
C.S.C., Sri Krishna Agarawal, Sri Sudarshan
Singh, Sri R.C. Shukla, Sri Gaurav Mahajan,
Sri Anant Kumar Tiwari

A. Tax Law - CGST Act,2017 & U.P. GST
Act,2017 - Sections 140 & 174(2)(c) -
Central Goods and Services Tax Act, 2017
- Sections 168 & 168A - Uttar Pradesh
Goods and Services Tax Act, 2017 -
Central Excise Act, 1944 - The Uttar
Pradesh Value Added Tax Act, 2008 - U.P.
Goods and Services Tax Rules, 2017 - Rule
117 & 117 (1)(a) - Indian Income Tax Act,
1922 & Section 24(1) & CGST Rules and
UPGST Rules: Rule 121 -

The first issue for consideration is whether
the ITC is a vested right under the GST
regime. This issue arises in the context of
transition provisions enacted under the CGST
Act read with the CGST Rules. (Para 22)

The legislature did not intend to nullify those
credits earned under the pre-existing laws,
rather, it intended to transition those credits to
the GST regime. That appears to be the plain
object and intent, of section 140 of the CGST &
UPGST Acts. It has also allowed ITC to
unregistered dealers under the preexisting laws,
on tax paid inputs, stocks etc., on the strength
of Tax Invoices. (Para 23, 48)

Thus, u/s 140(1) of the Act, a "registered
person", other than one opting to pay tax by
way of composition levy (u/s 10 of the CGST
Act) has been made entitled to take benefit of
any CENVAT credit of eligible duties that may
have been carried forward on 30 June 2017.
However, by virtue of the plain language of
Section 140 of the Act, that right is subject
(mainly) to fulfilment of two conditions, namely,
782 INDIAN LAW REPORTS ALLAHABAD SERIES
the return for such CENVAT credit of eligible
duty and/or VAT ITC should have been
furnished by a "registered person" under the
pre-existing law/s. In case such person was not
registered under the pre-existing laws, he may
avail ITC on tax paid inputs, stocks etc., against
Tax Invoices. Second, compliance of time and
manner prescribed, is required to be fulfilled.
Importantly, the words "within such time and"
have been inserted by Finance Act, 2020, with
full retrospective effect from 01.07.2013. (Para
25)

As to the prescribed manner, there is no quarrel
between the parties. The petitioners do not
contend, that the details required to be filled up
in the Form were impossible or difficult to be
filled up. The only challenge they raise is based
on their inability to submit electronically that
data on the GST Portal, within time granted.
(Para 48)

Clearly, while enacting the GST law, the
Parliament and the State Legislature were
conscious of the duties and obligations created
under the new law. It is those obligations for
which timeline and manner has been prescribed.
Therefore, the condition within such time and
within such manner, must be read only in
conjunction with the right to avail entitlement to
take into the Electronic Credit Ledger, the
amount of CENVAT credit or ITC. (Para 30)

Thus, the right to avail ITC did not get
vested on the petitioners upon their filing
returns under the pre-existing laws. The
petitioners were obligated to perform
further act under the new laws i.e., CGST
Act and the UPGST Act - to submit
electronically, Form GST TRAN-1 and/or
TRAN-2, before they could carry that
credit to their Electronic Credit Ledger.
(Para 32)

It may not be empirically correct to
contend that CENVAT or ITC is a pure
concession
as
concessions
do
not
necessarily spring from a conceptual base
to tax value addition. However, that principle
may be relevant only to determine the ITC
arising against transactions performed after
enforcement of the GST regime i.e., post
01.07.2017. It may not be true of past/earlier
transactions
arising
under
the
preexisting/repealed laws, in the context of pure
transition provision. (Para 35)

B. Failure or inability to provide that
reliable online platform would render the
strict time prescription (made u/s 140 of
the CGST Act read with Rule 117 of the
CGST Rules), arbitrary and therefore
violative of Article 14 of the Constitution
of India. Though the consequence of nonsubmission of those Forms are also clearly
visible, yet no procedural law may be valid or
held
mandatory,
if
there
exists
physical
impossibility
or
unreasonable
difficulty/obstruction, to comply with the same.
Once the CGST Act prescribed the manner and
time to submit/revise only electronically through
Form GST TRAN-1/ TRAN-2, the State was
obligated to provide a robust and wholly reliable
GST Portal to comply with that law. (Para 50)

Petitioners were required to submit/revise
electronically,
Form
GST
TRAN-1/TRAN-2
electronically.
They
were
obstructed,
and
remained disabled (generally) owing, not to any
conduct attributable to them but owing solely to
factors beyond their control and for reasons
attributable to the respondents. The difficulties
claimed were generic as had been recognized by
the
CBIC
itself
vide
his
circular
dated
03.04.2018 as also by various decisions of the
other High Courts. (Para 60, 61)

The time limit u/s 140(1) of the CGST Act
read with Rule 117 of the CGST Rules
2017 and parallel provisions under the
State law (to submit Form TRAN-1/TRAN2 electronically, within 90 days from the
appointed date), was the time limit
specified
in
or
prescribed
by
those
enactments. Therefore, even if reference to
Section 140 has not been specifically made in
any of the orders and notifications issued u/Rule
117(1), Rule 117(1)A or Section 140A or Section
168A still, undeniably, the time limit to submit
electronically Form GST TRAN-1/TRAN-2 stood
extended in accordance with law, up to
31.08.2020. No contrary provision of law, either
statutory or delegated, has been shown to exist
as may warrant a different construction to be
made to the exercise of powers made by the
Commissioner CGST or of the CBIC or the
10 All. M/s Ratek Pheon Friction Technologies Pvt. Ltd., Noida, Gautam Budh Nagar Vs.
 Principal Commissioner, Central G.S.T. Noida & Ors.
783
Central Government, acting either on their own
or on the recommendation of the CBIC or the
GST Council. (Para 43)

C. Rule of law and good administration go
hand in hand. It is true, no ITC may arise
under the GST regime unless a "registered
person" fulfils the conditions therefore, so
also, the administration of tax law that is
in the hands of the GST Council, GST
Commissioner
(Central),
GST
Commissioner (UP), GST Network and all
other State or statutory authorities, must
allow all "registered persons"/taxpayers,
reasonable opportunity to exercise their
rights and make their claims, in the
manner contemplated by law. (Para 62)

Though unintentional on part of the State
authorities, it cannot be lost sight that the
obstruction thus caused was attributable only to
the conduct of the State authorities since, the
GST Portal is a creation of the State authorities
and the responsibility to run the same
seamlessly, rests exclusively on them. The
"registered
persons"/taxpayers,
whose
rights were adversely impacted by the
lack of smooth operation of the GST
Portal, could not be saddled with any civil
consequences
arising
from
the
nonfunctioning
or
improper
or
irregular
functioning of the GST Portal. (Para 63)

Once the CBIC clearly recognised the existence
of such technical glitches on the GST Portal,
there is no reasonable basis on which the CBIC
and the revenue authorities insisted for specific
evidence and verification as a condition to grant
relaxation of timeline - to submit/revise/rerevise Form GST TRAN-1/TRAN-2. (Para 64)

D. In absence of any enabling law, that
burden
cast
on
the
"registered
persons"/tax payers - to lead evidence of
difficulty faced, is wholly arbitrary and
unreasonable
and
therefore
unenforceable. The injury caused being
attributable to the State authorities, even if
unintentional,
the
"registered
persons"/taxpayers cannot be burdened today,
to bring home evidence to establish the extent
of the injury caused that too w.r.t. transition
provision newly introduced, especially when the
injury sprung from a generic event/cause. (Para
65)

At the relevant time, there was no requirement
in law and even today, there is no requirement
either under the Act or the Rules, to obtain
evidence of every attempt made to submit Form
GST TRAN-1 or TRAN-2. It is only by way of the
Circular instruction dated 3.4.2018 that such a
requirement was introduced by the revenue
authorities.
It
is
arbitrary
and
therefore
unenforceable. (Para 67, 68)

E. Any law that may differentiate between
two similarly situated persons based on a
chance
occurrence/s
and
allow
the
valuable civil rights of a citizen to be
prejudiced, based solely on that, would
remain
exposed
to
the
vice
of
arbitrariness and therefore be invalid. If
allowed to work, it (submission of evidence of
attempts) would create hostile discrimination
between two similarly situated persons based
solely on the chance occurrence of one having
in his possession proof of attempt/s made to
submit/revise/re-revise Form TRAN-1/TRAN-2,
electronically, though he was not required (by
law), to obtain or maintain such evidence. (Para
69)

Writ petitions allowed. (E-4)

Precedent followed:

1. R.R. Distributors Pvt. Ltd. Vs Commissioner of
Central Tax, GST Delhi North & anr., WP (C) No.
4143/2020, decided on 27.05.2021 (Para 12)

2. Blue Bird Pure Pvt. Ltd. Vs U.O.I. & ors., 2019
SCC OnLine Del 9250 (Para 12)

3. M/s Carlstahl Craftsman Enterprises Pvt.
Ltd.Vs U.O.I. & 3 others, W.P. No. 11119/2020
dated 23.04.2020 (Para 12)

4. M/s Bharat Electronics Limited Vs Commissioner
of GST & Central Excise & 3 ors., W.P. No. 2937 of
2019 dated 21.06.2021 (Para 12)

5. Jakap Metind Pvt. Ltd. Vs U.O.I., 2019 (31)
GSTL 422 (Guj.) (Para 12)
784 INDIAN LAW REPORTS ALLAHABAD SERIES
6. Adfert Technologies Pvt. Ltd. Vs U.O.I.& ors.,
W.P. No. 30949 of 2018, dated 04.11.2019
(Para 12)

7. Commissioner of Income Tax, Delhi Vs
Mahalaxmi Sugar Mills Co. Ltd., (1986) 3 SCC
544 (Para 13)

8. SKH Sheet Metal Components Vs U.O.I. &
ors., (2020) 38 GSTL 592 (Del) (Para 14)

9. Dhampur Sugar Mills Ltd. Vs Commissioner of
Income Tax Delhi Central, (1973) 90 ITR 236
(Para 14)

10. State of Mysore & ors. Vs Mallick Hashim &
Co., (1974) 3 SCC 251 (Para 18)

11. Brintell Vs Secretary of State Security,
(1991) 2 All ER 726 (Para 20)

12. K.S. Paripoornan Vs St. of Kerala & ors.,
(1994) 5 SCC 593 (Para 20)

13. M/s P.R. Mani Electronics Vs U.O.I. & anr.,
(2020) 7 MLJ 605 (Para 21)

14. Bhargava Motors Vs U.O.I., WP (C) No.
1280/2018, dated 13 May, 2019 (Para 52)

15. M/s Ingersoll-Rand Technologies & Services
Pvt. Ltd. Vs U.O.I. & 3 ors., Writ Tax No. 1120
of 2019 (Para 57)

16. St.of Andhra Pradesh & anr. Vs Nalla Raja
Reddy & ors., AIR 1967 SC 1458 (Para 69)

17. S.G. Jaisinghani VsUOI & ors., AIR 1967 SC
1427 (Para 70)

Precedent distinguished:

1. Jayam & Company Vs Assistant Commissioner
(CT) & another, (2016) 15 SCC 125 (Para 20)

2. ALD Automotive Pvt. Ltd. Vs Commercial Tax
Officer & ors., 2018 (364) ELT 3 (SC) (Para 20)

3. Siddharth Enterprises Vs Nodal Officer, 2019
(29) GSTL 664 (Guj.) (Para 12)

Present petitions seek relief in the nature
of
mandamus
commanding
the
respondent
authorities
to
allow
the
petitioners
to
submit/revise/re-revise
electronically,
their
respective
declarations on Form GST TRAN-1 and GST
TRAN-2, under the provisions of the CGST
Act, 2017 and, the UPGST Act, 2017, to
carry forward the CENVAT and VAT Input
Tax Credit, under the CGST Act, 2017 and
the U.P. GST Act, 2017.

(Delivered by Hon'ble Naheed Ara
Moonis, J.
&
Hon'ble Saumitra Dayal Singh, J.)

1. Heard Mr Shubham Agarwal, Mr
Nishant Mishra, Mr Praveen Kumar, Mr
Suyash Agarwal, Mr Rahul Agarwal, Mr
Rishi Raj Kapoor, Mr Ayush Khanna, Mr
Harsh Vardhan Gupta, Mr Vishwjit, Mr
Krishnaji Khare, Mr Vinayak Mithal, Mr
Pranjal Shukla, Ms Sanyukta Singh and Ms
Pooja Talwar for the petitioners; Mr
Manish
Goyal,
learned
Additional
Advocate General, assisted by Mr Apurva
Hajela, Mr A.C. Tripathi, Mr B.P. Singh
Kachhawah
and
Mr
Manoj
Kumar
Kushwaha for the State; Mr Shashi Prakash
Singh, learned Additional Solicitor General
of India, assisted by Mr Sudarshan Singh,
Mr Krishna Ji Shukla, Mr Anant Kumar
Tiwari, Mr Rajesh Tripathi, Mr Ishan
Shishu and Mr Manoj Kumar Singh for the
Union of India and; Mr Ramesh Chandra
Shukla, Mr Ashok Singh, Mr Parv
Agarwal, Mr Dhananjai Awasthi, Mr
Krishna Agarwal, Mr Gaurav Mahajan, Mr
Amit Mahajan, Mr Ankur Agarwal and Mr
B.K. Singh Raghuvanshi, for the CGST
authorities.

2. This batch of writ petitions has
been filed seeking relief in the nature of
mandamus commanding the respondent
authorities to allow the petitioners to
submit/revise/re-revise electronically, their
10 All. M/s Ratek Pheon Friction Technologies Pvt. Ltd., Noida, Gautam Budh Nagar Vs.
 Principal Commissioner, Central G.S.T. Noida & Ors.
785
respective declarations on Form GST
TRAN-1 and GST TRAN-2, under the
provisions of the Central Goods and
Services
Tax
Act,
2017
(hereinafter
referred to as the ''CGST Act') and, the
Uttar Pradesh Goods and Services Tax Act,
2017 (hereinafter referred to as the
''UPGST Act'), to carry forward the
CENVAT and VAT Input Tax Credit,
under the CGST Act , 2017 and the U.P.
GST Act, 2017. No other relief has been
pressed at the hearing.

3. On facts, broadly there are three
types of cases. First, some of the petitioners
claim, they had submitted electronically,
the Form GST TRAN-1 and/or TRAN-2
(on the GST Portal), within time, but errors
had crept in that Form so submitted. They
attempted to correct/revise that Form GST
TRAN-1 and/or TRAN-2 on the GST
Portal within time granted for the same but
could not succeed due to technical glitches
on the GST Portal. They have evidence of
such attempt/s made. In the second type of
cases, the petitioners claim, they could not
submit electronically, the Form GST
TRAN-1 and/or TRAN-2 within time
granted (despite efforts made by them), due
to technical glitches on the GST Portal.
They have evidence of such attempt/s
made. The third type of cases, involve a
variety of the first two types described
above. Therein, petitioners claim, though
they tried to submit or revise electronically,
the Form GST TRAN-1 and/or TRAN-2 on
the GST Portal, they could not succeed in
the same. They do not have any evidence of
such attempt made to submit or revise
electronically, the Form GST TRAN-1
and/or TRAN-2. Thus, the petitioners claim
denial of full benefit of transition credit
arising from transactions performed under
the repealed indirect tax enactments.

4. For the purposes of convenience,
we have heard this batch of writ petitions
on the facts disclosed in Writ Tax No. 477
of 2021 (M/s Ratek Pheon Friction
Technologies Private Limited Vs. Principal
Commissioner, Central Goods and Services
Tax & Ors.); Writ Tax No. 225 of 2021
(M/s Modern Plywood Center Vs. Union of
India & Ors.) and; Writ Tax No. 872 of
2018 (Allied Agencies Vs. Union of India
& 4 Ors.). The facts of these three cases
would be sufficient to cover the discussion
necessary for the purposes of our decision.
At the same time, we deem appropriate to
take note of the basic facts involved in all
cases in this batch of petitions. Those are as
below.
786 INDIAN LAW REPORTS ALLAHABAD SERIES
10 All. M/s Ratek Pheon Friction Technologies Pvt. Ltd., Noida, Gautam Budh Nagar Vs.
 Principal Commissioner, Central G.S.T. Noida & Ors.
787
788 INDIAN LAW REPORTS ALLAHABAD SERIES
10 All. M/s Ratek Pheon Friction Technologies Pvt. Ltd., Noida, Gautam Budh Nagar Vs.
 Principal Commissioner, Central G.S.T. Noida & Ors.
789

5. In Writ Tax No. 477 of 2021, the
petitioner contends, it filed its return under
the Central Excise Act, 1944 on Form ER-1,
on 13.07.2017 for the period ending
30.06.2017, disclosing total CENVAT credit
available Rs. 52,54,954/-. Also, it submitted
electronically its Form GST TRAN-1, for the
period ending 30.06.2017, within time
granted. Inadvertently, it submitted the figure
Rs. 50,702/- as admissible CENVAT in place
of
the
actual
entitlement
figure
Rs.
52,54,954/-. The Form GST TRAN-1
containing the aforesaid error was submitted
electronically on 13.07.2017 on the GST
portal. Despite best efforts, the petitioner
could not submit electronically the revised
Form GST TRAN-1 before the cut-off date
27.12.2017 as that function on the GST portal
had not been activated or not made fully
functional. Besides making unsuccessful
attempts to revise the Form GST TRAN-1,
manually, the petitioner further claims to
have written to the Principal Commissioner
CGST on 10.9.2020 and 12.2.2021 to verify
the correct amount of ITC available to it and
to resolve the issue in favour of the petitioner.
Vide communication dated 15.3.2021, the
Principal Commissioner CGST refused that
resolution since the petitioner's request was
received on 26.05.2020, after expiry of the
last date for that purpose, 31.03.2020.

6. In Writ Tax No. 225 of 2021, the
petitioner contends, it filed its return under
the Central Excise Act, 1944 on Form ER-1
for the period ending 30.06.2017 disclosing
ITC
available,
Rs.
2,82,035/-.
The
petitioner submitted electronically its Form
GST TRAN-1 on 23.12.2017 disclosing Rs.
2,82,035/- ITC availed [in Table no.5(c) of
Form TRAN-1]. The balance ITC of
eligible duties on inputs held on stocks as
on 30.06.2017 was Rs. 8,52,511/-. It was
inadvertently filled up in Table no. 7(d) in
place of Table no. 7(a) of the Form GST
TRAN-1. The petitioner tried to revise the
Form GST TRAN-1 but could not succeed
due to technical glitches on the GST Portal.
Petitioner also claims to have lodged a
complaint with the GST Helpdesk on
30.12.2019 as also a grievance on the
common
portal,
on
11.02.2020.
On
04.03.2020, the petitioner further claims to
have informed the Nodal Officer and the
Assistant
Commissioner
about
the
inadvertence and requested permission to
correct the same. Evidence in support of
such claim is on record. However, no relief
came to be granted to the petitioner.

7. In Writ Tax No. 872 of 2018, the
petitioner claims, it held tax paid stocks for
the period ending 30.06.2017 disclosing
ITC available, Rs. 16,00,639.74/-. It tried,
but could not submit electronically, the
Form GST TRAN-1 due to technical
glitches on the GST Portal. It admits, there
is no evidence available with it, to establish
790 INDIAN LAW REPORTS ALLAHABAD SERIES
the number of attempts made by it or the
date or time when such attempts may have
been made - to submit electronically, the
Form GST TRAN-1.

8. Largely, all learned counsel for the
petitioners have relied on the provisions of
Section 140 of the CGST Act and the
UPGST Act to contend - upon filing their
return under The Central Excise Act, 1944
and/or The Finance Act, 1994 and/or The
Uttar Pradesh Value Added Tax Act, 2008,
for the period 30.06.2017, a right accrued
or vested in their favour, to claim transition
ITC under the GST regime. The transition
provisions and the Rules framed under the
CGST Act and the UPGST Act are only
enabling provisions. They govern the
procedure to avail such ITC under the
CGST Act and/or the UPGST Act.
Reference has also been made to Section
174(2)(c) of the CGST Act and the UPGST
Act to submit - the right accrued to the
petitioners under the repealed law i.e. The
Central Excise Act, 1944; The Finance Act,
1994 and; The Uttar Pradesh VAT Act,
2008, stood saved under the CGST Act and
the UPGST Act. That substantive right
could not be defeated by the procedural law
framed and enforced by the delegate of the
legislature i.e. the Central Government and
the State Government.

9. Alternatively, reliance has been
placed on Rule 117 of the Central Goods
and Services Tax Rules, 2017 (hereinafter
referred to as the ''CGST Rules') read with
Rule 117 of the Uttar Pradesh Goods and
Services Tax Rules, 2017 (hereinafter
referred to as the ''UPGST Rules') read with
Sections 168 and 168A of the CGST Act,
to submit - in any case, the time to submit
electronically, Form GST TRAN-1 existed
up to 31.08.2020 in view of Order no.1 of
2020 issued by the Principal Commissioner
GST under Rule 117(1)(a) of the CGST
Rules read with notification no. 35 of 2020
read with notification no. 55 of 2020 dated
26.06.2020, both issued under Section
168A of the CGST Act by the CBIC dated
03.04.2020. These orders and notifications
have been referred to in conjunction with
the statutory provisions whereunder they
were issued - to establish the procedural
requirement
to
submit
or
revise
electronically, the Form GST TRAN-1
and/or
TRAN-2
(as
existed
up
to
27.12.2017), stood revised and extended up
to 31.08.2020. Denial of a real opportunity
to submit or revise electronically, the Form
GST TRAN-1 and/or TRAN-2, prior to that
date, was contrary to law. It is strenuously
urged that the extension of time, thus
granted, had been obstructed by the
executive
authorities.
They
chose
to
selectively and therefore arbitrarily allow
some "registered persons" to submit/revise
electronically, the Form GST TRAN-1
and/or TRAN-2, who fulfilled the arbitrary
conditions imposed by such authorities.

10. Second, as to the evidence of
technical difficulties experienced by the
petitioners and the glitches suffered on the
GST Portal, it has been submitted, that fact
is wholly admitted and documented. First,
reference has been made to repeated
extensions of time granted by all the
statutory authorities and the legislative
action taken to extend the timeline to
submit Form GST TRAN-1, for that
reason. Then reference has been made to
Circular
no.
39/13/2018-GST
dated
03.04.2018 issued by CBIC recognising the
existence of such difficulties and efforts
made to remedy the wrong. In face of that
admission, no further proof or evidence is
required, to establish difficulties faced in
individual cases. That test, if applied,
would lead to arbitrary results and promote
10 All. M/s Ratek Pheon Friction Technologies Pvt. Ltd., Noida, Gautam Budh Nagar Vs.
 Principal Commissioner, Central G.S.T. Noida & Ors.
791
hostile discrimination. Last, reference has
been made to various decisions of different
High Courts, chiefly, the Delhi High Court,
Madras High Court, Gujarat High Court,
Calcutta High Court, Bombay High Court
and Punjab & Haryana High Court, to
submit - technical glitches and difficulties
faced
by
different
"registered
persons"/taxpayers,
in
submitting/revising/re-revising,
electronically, their Form GST TRAN-1
and/or TRAN-2 on the GST portal was not
a local phenomenon or a rare event but a
common and generic difficulty faced by all
"registered persons"/tax payers across the
country, while working on the newly
designed GST Portal.

11. In the first place, that difficulty
arose on account of the switch over
required to be made from the plural indirect
tax regime (including Central Excise,
Service Tax and VAT laws) to the singular
GST regime. Second, difficulty arose on
account of only one method provided to
migrate and merge from the old/plural
indirect tax regimes to the new/singular
GST regime. While doing so, the executive
authorities acted in a manner that was
unmindful of the inherent difficulties and
challenges faced by the vital stake holders
i.e., the "registered persons"/taxpayers and
tax professionals and tax authorities. Third
all such "registered persons"/taxpayers and
tax professionals had not migrated to online
or digitized platform, before 30.06.2017.
Fourth, the newly devised GST Portal was
hurriedly activated, leading to multiple
teething as also genuine technical and other
difficulties faced by all including the CGST
& UPGST authorities. Since the existence
of such technical and other difficulties and
glitches
is
admitted
or
indisputably
established, no further burden exists on the
individual
"registered
person"/taxpayer/petitioner to establish the
extent of difficulty faced by each such
person or to establish strict proof that the
Form GST TRAN-1 and/or TRAN-2 could
not be submitted or revised or re-revised
electronically, for reason of that difficulty.

12. Shri Shubham Agarwal (in Writ
Tax No. 477 of 2021) has placed reliance
on the decisions of the Delhi High Court in
R.R.
Distributors
Pvt.
Ltd.
Vs.
Commissioner of Central Tax, GST,
Delhi North & Anr., WP (C) No.
4143/2020,
decided
on
27.05.2021
wherein, following its earlier decision in
Blue Bird Pure Pvt. Ltd. Vs. Union of
India & Ors., 2019 SCC OnLine Del
9250, the Delhi High Court held -
inadvertent and genuine mistakes in filling
up of credit in Form GST TRAN-1 should
not preclude tax payers from having their
claims examined in accordance with law.
That Court further opined, non-filling of
Part VII-B of Table no. 7(a) and 7(d) of
Form GST TRAN-1 could not impair the
rights of the assessee to claim transition
ITC. It further recognized - at the relevant
time, the GSTN system was in a trial-anderror phase and that from the beginning, the
GST Network threw up difficulties in
filling up returns etc., on the GST Portal.
He has also relied on a decision made on
similar lines, pronounced by the Madras
High Court in M/s Carlstahl Craftsman
Enterprises Private Limited Vs. Union of
India & 3 Ors., W.P. No. 11119/2020
dated 23.4.2020, and another decision of
that High Court in M/s Bharat Electronics
Limited Vs. Commissioner of GST &
Central Excise and 3 Ors., W.P. No. 2937
of 2019 dated 21.6.2021, wherein the
multiple difficulties faced by the taxpayers
in filling up and submitting electronically
Form GST TRAN-1 were recognized. He
also relied upon the decision of the Gujarat
792 INDIAN LAW REPORTS ALLAHABAD SERIES
High Court in Jakap Metind Pvt. Ltd. Vs.
Union of India, 2019 (31) GSTL 422
(Guj.) and Siddharth Enterprises Vs.
Nodal Officer, 2019 (29) GSTL 664
(Guj.)
to
submit
that
in
similar
circumstances, the Gujarat High Court has
also taken the same view as taken by the
Delhi High Court while allowing the Form
GSTN TRAN-1 to be revised. Last,
reliance has also been placed on the
decision of the Punjab & Haryana High
Court in Adfert Technologies Pvt. Ltd.
Vs. Union of India & Ors., CWP No.
30949 of 2018, dated 04.11.2019.

13. Shri Nishant Mishra (in Writ Tax
No. 225 of 2021), has, besides adopting the
submissions of Shri Shubham Agarwal,
further submitted - under Rule 121 of the
CGST Rules and the UPGST Rules, the
assessing authority is obligated to verify
the correct amount of ITC available. Thus,
it is his submission, even if some
inadequacies or errors or deficiencies may
be attributed to the conduct of the
"registered persons"/taxpayers/petitioners,
yet, ITC being a vested statutory right, the
statutory
authorities
would
remain
obligated to make due verification of the
actual amount of carry forward ITC
available to such persons, by looking at
their returns filed under the Central Excise
Act and/or the Service Tax law and/or the
UP VAT Act, 2007, for the period ended
30.06.2017. So long as that/those return/s
may be found to have been filed within
time and so long as there is nothing to
doubt the correctness of the CENVAT or
ITC disclosed in that/those return/s, the
authority would have to allow such
"registered person" the benefit of the ITC
under the CGST Act and the UPGST Act,
accordingly. In that regard, he has relied
upon a decision of the Supreme Court in
Commissioner of Income Tax, Delhi Vs.
Mahalaxmi Sugar Mills Co. Ltd., (1986)
3 SCC 544.

14. He would further submit, there is
a difference between the act of revision and
correction in a return. By revision, a
"registered person" may change the nature
and character of the disclosures made in the
original return. However, by a simple
correction in its return, the "registered
person" only corrects the disclosure made
in Table no.7(a) and 7(d) of the Form GST
TRAN-1. It would relate back to the
original form submitted by the petitioner.
He has relied upon the decision of the
Delhi High Court in SKH Sheet Metal
Components Vs. Union of India & Ors.,
(2020) 38 GSTL 592 (Del). He has also
relied on a decision of this Court in
Dhampur
Sugar
Mills
Ltd.
Vs
Commissioner of Income-Tax, Delhi
Central, (1973) 90 ITR 236 to submit that
an error in Form GST TRAN-1 should be
allowed to be corrected, at any time.

15. As to the submission advanced by
Sri Nishant Mishra, relying on the decision
in Commissioner of Income Tax Vs.
Mahalaxmi Sugar Mills Co. Ltd. (supra),
the precise issue was whether the business
loss incurred in India could be set off
against
dividend
income
accrued
in
Pakistan, in the context of Section 24(1) of
the Indian Income Tax Act, 1922. The issue
was decided on the strength of the language
of that statutory provision under that Act.

16. In the present case, the duty on the
statutory
authorities
to
examine
the
correctness of the claim of ITC would arise
only upon submission of declaration on
Form GST TRAN-1. We find no statutory
basis to obligate the statutory authorities to
grant benefit of ITC in absence of such
declaration. For that reason, we find the
10 All. M/s Ratek Pheon Friction Technologies Pvt. Ltd., Noida, Gautam Budh Nagar Vs.
 Principal Commissioner, Central G.S.T. Noida & Ors.
793
ratio in the aforesaid decision to be
inapplicable to the facts and law in the
present case.

17. As to the other submission
advanced by Sri Mishra, relying on
Dhampur Sugar Mills Ltd. (supra), there
could be no dispute that a correction made
in the return or declaration filed by a
"registered person"/taxpayer would relate
back to the date of filing of the original
return/declaration. However, the issue here
is whether the petitioners continues to be
entitled to submit and/or correct their
return/declaration on Form GST TRAN-1
and/or TRAN-2. Plainly, the ratio of the
decision in the case of Dhampur Sugar
Mills Ltd. (supra) is not relevant at the
present stage.

18. Shri Praveen Kumar (in Writ Tax
No. 872 of 2018) has also adopted the
submissions advanced by Shri Agarwal and
Shri Mishra. He has further emphasised
that the right to claim ITC is a vested right.
Relying upon the decision of the Gujarat
High Court in Siddharth Enterprises Vs.
Nodal Officer, 2019 (29) GSTL 664
(Guj.), he would submit, that right could
not be defeated by a defective procedure
devised and enforced by the rule making
body. Also, he has relied on the decision of
Supreme Court in State of Mysore & Ors.
Vs. Mallick Hashim & Co., (1974) 3 SCC
251, to submit, time prescription could not
have been made by the rule making body
while making rule prescribing the Form
GST TRAN-1.

19. Shri Manish Goyal, learned
Additional Advocate General has relied on
the language of Section 140 of the CGST
Act to submit, no vested right ever accrued
to the petitioners to avail ITC under the
CGST or UPGST Act. The transition ITC
was only a concession granted. It could be
availed only in the event of Form GST
TRAN-1 being submitted electronically
within time and in the manner prescribed
by the Rules framed under the CGST Act.
Since some of the petitioners did not
submit their original or revised Form GST
TRAN-1, electronically, within the time
and in manner prescribed, no right to carry
forward ITC, as on 30.06.2017 ever
accrued to them. Such of the petitioners
who could file their Form GST TRAN-1
but did not revise or re-revise it within time
granted, cannot complain as they would be
allowed ITC up to the limit of the
disclosure made by them in their original
Form GST TRAN-1. To bolster that
submission, learned Additional Advocate
General has referred to the provisions of
Section 140 of the CGST Act together with
all its sub-sections, to highlight the
different contingencies contemplated under
each of the sub-section.

20. He has further submitted -
transition provision such as Section 140 of
the CGST Act & the UPGST Act is a
special provision. It has a temporary
enforcement. It exhausts upon the special
circumstance
(for
which
it
was
incorporated), coming to an end. He relies
on Britnell Vs. Secretary of State for
Social Security, (1991) 2 All ER 726.
Also, relying on the majority opinion in the
Constitution
Bench
decision
of
the
Supreme Court in K.S. Paripoornan Vs.
State of Kerala & Ors., (1994) 5 SCC
593, he would submit, such a transition
provision must be read keeping in mind the
mischief sought to be addressed by the
legislature while enforcing the substantive
law, during the period of transition. He has
also relied on the decision of the Supreme
Court
in
Jayam
&
Company
Vs.
Assistant Commissioner (CT) & Anr.
794 INDIAN LAW REPORTS ALLAHABAD SERIES
(2016) 15 SCC 125 and ALD Automotive
Pvt. Ltd. Vs. Commercial Tax Officer &
Ors., 2018 (364) ELT 3 (SC) to submit,
CENVAT and/or ITC carry forward as on
30.06.2017 was not a vested right but, only
a concession granted in law.

21. The submissions advanced by the
learned Additional Advocate General have
been adopted by the learned Additional
Solicitor General of India and other counsel
of the CGST authorities. Shri Krishna Ji
Shukla, learned counsel for the Union of
India also placed reliance on the decision of
the Madras High Court in M/s P.R. Mani
Electronics Vs. Union of India & Anr.,
(2020) 7 MLJ 605.

22. Having heard learned counsel for
the parties and having given our anxious
consideration to the issues raised, we find,
principally, three submissions are required
to be dealt with. The first issue for
consideration is whether the ITC is a vested
right under the GST regime. This issue
arises in the context of transition provisions
enacted under the CGST Act read with the
CGST Rules. Section 140 of that Act, reads
as under:

"140. transition Arrangements
for Input Tax Credit. (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 within such time
and 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.

(2) A registered person, other
than a person opting to pay tax under
section 10, shall be entitled to take, in his
electronic credit ledger, credit of the
unavailed CENVAT credit in respect of
capital goods, not carried forward in a
return, furnished under the existing law by
him, for the period ending with the day
immediately preceding the appointed day
within such time and in such manner as
may be prescribed:

Provided
that
the
registered
person shall not be allowed to take credit
unless the said credit was admissible as
CENVAT credit under the existing law and
is also admissible as input tax credit under
this Act.

Explanation: For the purposes of
this sub-section, the expression "unavailed
CENVAT credit" means the amount that
remains after subtracting the amount of
CENVAT credit already availed in respect
of capital goods by the taxable person
under the existing law from the aggregate
amount of CENVAT credit to which the
said person was entitled in respect of the
said capital goods under the existing law.

(3) A registered person, who was
not liable to be registered under the
existing law, or who was engaged in the
manufacture
of
exempted
goods
or
provision of exempted services, or who was
providing works contract service and was
availing of the benefit of notification No.
10 All. M/s Ratek Pheon Friction Technologies Pvt. Ltd., Noida, Gautam Budh Nagar Vs.
 Principal Commissioner, Central G.S.T. Noida & Ors.
795
26/2012-Service Tax, dated the 20th June,
2012 or a first stage dealer or a second
stage dealer or a registered importer or a
depot of a manufacturer, shall be entitled
to take, in his electronic credit ledger,
credit of eligible duties in respect of inputs
held in stock and inputs contained in semifinished or finished goods held in stock on
the appointed day subject to goods held in
stock on the appointed day, within such
time and in such manner as may be
prescribed,
subject
to
the
following
conditions, namely:-

(i) such inputs or goods are used
or intended to be used for making taxable
supplies under this Act;

(ii) the said registered person is
eligible for input tax credit on such inputs
under this Act;

(iii) the said registered person is
in possession of invoice or other prescribed
documents evidencing payment of duty
under the existing law in respect of such
inputs;

(iv)
such
invoices
or
other
prescribed documents were issued not
earlier than twelve months immediately
preceding the appointed day; and

(v) the supplier of services is not
eligible for any abatement under this Act:

Provided that where a registered
person, other than a manufacturer or a
supplier of services, is not in possession of
an invoice or any other documents
evidencing payment of duty in respect of
inputs, then, such registered person shall,
subject to such conditions, limitations and
safeguards as may be prescribed, including
that the said taxable person shall pass on
the benefit of such credit by way of reduced
prices to the recipient, be allowed to take
credit at such rate and in such manner as
may be prescribed.

(4) A registered person, who was
engaged in the manufacture of taxable as
well as exempted goods under the Central
Excise Act, 1944 or provision of taxable as
well as exempted services under Chapter V
of the Finance Act, 1994, but which are
liable to tax under this Act, shall be entitled
to take, in his electronic credit ledger,--