GSTN to consider providing in the software itself a facility of saving/printing forms submitted and review before submission – High Court
ABCAUS Case Law Citation:
ABCAUS 2926 (2019) (05) HC
Important Case Laws Cited/relied upon by the parties
Tara Exports v. Union of India
In this case, the Petitioner had filed a Writ Petition. The sole issue involved was the procedural glitch in the GST Network that had prevented the Petitioner from claiming input tax credit (ITC) of the excise duty paid by its vendor.
The Petitioner was a registered dealer. Under Section 140 (3) of the CGST Act, the Petitioner was entitled to claim credit of eligible duties in respect of the inputs held in stock and the inputs contained in semi furnished or furnished goods held in stock on the appointed day i.e. 30th June 2017.
On this basis, although not liable to be registered under the Central Excise Act, 1944, the Petitioner was entitled to claim credit of the excise duty paid on the goods in stock with him. He accordingly calculated the credit due to him.
According to the Petitioner there were certain other goods which did not involve the central excise component and there was credit that could be claimed by him thereon, which had to be postponed to the stage of actual sale of such goods.
As regards the excise duty credit, the Petitioner was required to fill up form TRAN-1 and for the other type of credit he has to fill up form TRAN-2.
According to the Petitioner there were a lot of technical glitches in uploading TRAN-1 form on the common portal within the prescribed period of 90 days. The due date for furnishing TRAN-1 was accordingly postponed from time to time and finally up to 27th December 2017. The Petitioner stated that he filed GST TRAN-1 on that day claiming the credit. He also furnished details of the stock held by him on that date. He also received an e-mail from the GST Network (GSTN) portal about successful filing of the said TRAN-1 form.
However, according to the Petitioner he was surprised to note that in his electronic credit ledger the aforementioned credit was not reflected. He thereafter approached the GST help desk and also wrote an e-mail.
Under these circumstances, the Petitioner filed the present writ petition.
The Hon’ble High Court had passed a detailed order discussing the affidavit filed on behalf of the GSTN which manages/administers the electronic portal. Reference was also made to the minutes of the meeting of the IT Grievance Redressal Committee.
The Court had directed GSTN to disclose as to what was actually filled in the TRAN-1 Form by the petitioner and the basis of its assertion that no credit was available to it, having regard to the fact that the petitioner claimed credit on the basis of real transactions in real goods.
In the affidavit filed before the Hon’ble High Court, GSTN stated that once value is entered in the FORM GST TRAN-1 and is duly saved and submitted, the same is posted in electronic ledger of the taxpayer for use to set off liabilities when the taxpayer “submits” FORM GST TRAN-1. The electronic ledger is visible on the portal to the taxpayer. The taxpayer can also view the FORM GST TRAN-1 by clicking on individual TRAN-1 form by logging into GST Portal.
The GSTN claimed that FORM GST TRAN-1 is available with the Petitioner even after submission and the Petitioner had deliberately not filed the same. The logs available were filed before the Court.
However, the Petitioner pointed out that as of present the portal does not permit a registered trader/dealer to save on his/her system the filled up TRAN-1 or TRAN-2 form. According to him it does not even permit a print out of a filled up form.
According to the Petitioner, this makes it difficult for the trader/registered dealer to know whether the form has been correctly filled up. The GSTN pointed out that a revision is possible, but only once in terms of Rule 120 A. It was stated that despite the Petitioner having availed of the facility of revision, the TRAN-1 form still does not reflect the credit amount.
The Hon’ble High Court clarified that at this stage, it was not concerned with the issue whether the Petitioner was entitled to the input tax credit as claimed by him. That was yet to be examined by the authorities. However, the issue was about the technical glitch in the system which does not permit a rectification in a situation where a dealer may have, due to inadvertence, or a bonafide error, not correctly filled up a form or where the system, due to a limitation in the algorithm/software programme, does not accept the entries sought to be made by the dealer.
The Hon’ble High Court observed that the GST system is still in a “trial and error phase” as far as its implementation is concerned. Ever since the date the GSTN became operational, the Court had been approached by dealers facing genuine difficulties in filing returns, claiming input tax credit through the GST portal.
The Court also noted down a decision of the Madras High Court where after acknowledging the procedural difficulties in claiming input tax credit in the TRAN-1 form that Court directed the Respondents “either to open the portal, so as to enable the petitioner to file the TRAN 1 electronically for claiming the transitional credit or accept the manually filed TRAN 1” and to allow the input credit claimed “after processing the same, if it is otherwise eligible in law”.
In the instant case also, the Court was satisfied that the Petitioner’s difficulty in filling up a correct credit amount in the TRAN-1 form was a genuine one which should not preclude him from having his claim examined by the authorities in accordance with law.
Accordingly a direction was issued to the GSTN to either open the portal so as to enable the Petitioner to again file TRAN-1 electronically or to accept a manually filed TRAN-1 on or before 31st May 2019. The Petitioner’s claims will thereafter be processed in accordance with law.
Also, with a view to ensure that in future such glitches can be overcome, the Court directed the GSTN to consider providing in the software itself a facility of the trader/dealer being able to save onto his/her system the filled up form and also a facility for reviewing the form that has been filled up before its submission.
The Hon’ble High Court said that the system should also permit the dealer to print out the filled up form which will contain the date/time of its submission online. The Court asked GSTN to also consider whether there can be a message that pops up by way of an acknowledgment that the Form with the credit claimed has been correctly uploaded.