2018 Taxo.online 418

WRIT PETITION NO. 2229 OF 2018 dated 19.10.2018





Central Goods & Services Tax Act, 2017

Section 140(8), 16(4) & 18(3)

M.S. Sanklecha, Justice & Riyaz I. Chagla, Justice

In favour of assessee

High Court


Represented by: –

Petitioner: – Mr.   Vikram   Nankani, Mr. Prithviraj Chaudhary

Respondent: – Mr. Amol Joshi, Mr. Pradeep S. Jetly

Order: –

  1. Rule.


  1. On 10th August 2017, Petitioner No. 2 transferred a part of its business i.e. Headend In The Sky (HITS) to Petitioner No. 1. However, as on 1st July 2017 there was Input Credit available to   the Petitioner      2   from   the   earlier   CENVAT Regime. Thus, the Petitioner No. 2 sought to carry forward its available Input Credit to the GST regime by filing TRANS­1. In its revised TRANS­1 the Petitioner No. 2 in terms of Section 140(8) of the Central Goods and Services Tax Act, 2017 (for short “the Act”) sought to distribute the Input Credit available to it   amongst   its   branch   offices/locations   which   have   separate registration   under   the   Act.   However,  due   to   technical difficulties,   though   the   revised   TRANS­1   was   accepted,   the distribution   of   the   credit   available   to   it   among   its   various branches/locations is not reflected on the website. Thus, the GST credit ledger available at the various branches/locations do not reflect the credit which would be available to it on account of the distribution done by the Mumbai location of Petitioner No. 2.
  1. In cases of transfer of business as in this case from Petitioner No. 2 to Petitioner No. 1 in terms of Section 18(3) of the Act, the transferee of a business would be entitled to take input tax   credit   which   remains unutilised   in   the   transferor’s books. This unutilised credit would be reflected in ITC­02 to be filed by the Petitioner No. 2. However, this flow of Input Credit to Petitioner No. 1 from Petitioner No. 2 is not taking place as the Revised TRANS­1 to the extent it shows distribution is not being      This   admittedly   in   view   of   the   technical difficulties as recorded in the Minutes of the second Meeting of Grievance   Redressal Committee   held   on   21st   August   2018, where the system is not accepting a downward revision of Input Credit available. As a consequence of the distribution as sought by the Petitioner No. 2 to the various locations/branches in its revised TRANS­1 not being reflected on the website, the Input Credit   cannot   be   reflected   in   the   GST   ledger   at   the branches/locations. Therefore, the branches/locations are not able to utilise the Input Credit by filing the GSTR­3B. Further it is pointed out that in terms of Section 16(4) of the Act, the last date for taking the input tax credit for the financial year period ending March 2018 would be the 20th October 2018. In case the same   is   not   reflected   in   the   Form   GSTR­3B   return   the

Petitioners’   location/branches   would   lose   the   benefit   of   the input tax credit. This position in law is not disputed by the Revenue.


  1. Further our attention is drawn to the Ministry of Finance press release dated 18th October 2018 wherein it has the last date to avail all input tax credit in respect of invoices issued for   the   period   July   2017   to   March   2018   is   Although   the   above   press  note   does   not   in   terms   deal   with and/or make reference to the Input Credit available from the CENVAT regime being transited into the present GST regime. The Revenue does not dispute the Petitioners’ contention that in such cases also because of the mandate of Section 16(4) of the Act, if the credit is not availed of prior to 20th October 2018, it would lapse.


  1. This Petition was adjourned from 4th October 2018 to 12th October 2018 at the instance of the Respondents. On 12th October 2018 this Petition was again adjourned to 17th October 2018  (at   the   instance   of   the   Petitioner).   On   17th October   2017,  it   was   adjourned   at   the   request   of   the Respondents in particular to respond to the case made out by the      Today, when   the   Petition   reached,  the Respondents place reliance upon the earlier Additional Affidavit dated 21st September 2018. It does not deal with the above contention urged by the Petitioners. In fact, on facts and/or in law   at   this   stage,   the   Respondents   do   not   dispute   that   the Petitioners   are   entitled   to   distribute   the   credit   in   terms   of Section 140(8) of the Act nor dispute that it is entitled to and/or covered by the Assessees’ who can file form GSTR­3B, nor that the provisions of Section 16(4) of the Act apply, nor dispute that the last date for filing the GSTR­3B is 20th October 2018 and not doing so would result in the lapse of the credit.


  1. In fact the Petitioners location at Delhi had filed a Writ Petition in the Delhi High Court bearing Writ Petition No. C­8691 of 2008 (Indusind Media Communications Ltd. & Anr. Vs. Union of India), wherein the Petitioners at Delhi branch/location had made a grievance of not being entitled to take the transition credit i.e. the Input Credit available prior to 30th June 2017 for payment of tax  post 1st July 2017. The Hon’ble Delhi  High Court in its order dated 16th October 2018 in the above Petition while admitting the Petition noted the fact that the Grievance Redressal Forum of the GST Council in the Meeting held on 21st August   2018   had   recorded   in   its   minutes   that   the   Delhi branch/location could not file its GSTR­3B and take credit in view of technical problems in uploading TRANS­1 and that the grievance needs to be addressed. Thus, pending the redressal of the Petitioners’ grievance, the Delhi High  Court  by its order dated 16th October 2018 has allowed the Delhi branch/location to file GSTR­3B Form manually and take the credit distributed to it in terms of the third proviso to Section 140(8) of the Act subject to the final outcome of the Petition.


  1. In view of the above, the undisputed position before us is that the Petitioners are entitled to distribute the Input Credit available   with   it   as   on   1st   July   2017   amongst   its branches/locations. This distribution has not been possible on account of technical problems of the Respondents. Further the availment of input tax credit available on 1st July 2017 has to be done on or before 20th October 2018 in view of Section 16(4) of the Act. Thus, it is likely that the Petitioners may be deprived of the facility of the input tax credit available with it on 1st July 2017, if the same is not taken before 20th October 2018. It is to be noted that the Respondents have extended the time to file TRANS­1 and TRANS­2, but no such extension has been granted to extend the time to file GSTR­3B. Thus, in the above facts, pending the final disposal of the Petition (when these issues will be considered in greater depth), as the system is not accepting it, the Petitioners would manually file with the Respondents a copy of its revised TRANS­1, ITC­01 and also GSTR­3B at Mumbai (in physical form).


  1. On the basis of the revised TRANS­1, ITC­02 and the GSTR­3B at Mumbai (to be certified by the Commissioner at Mumbai), the   Petitioners   will   be   entitled   to   take   the   credit reduced   at   Mumbai   (Maharashtra)   to   its   locations   in   Delhi, Gujarat   and   Karnataka   subject   to   the   satisfaction   of   the Commissioner having jurisdiction over those locations. We are not giving any directions to the Commissioners of Delhi, Gujarat and Karnataka as in terms of Section 25(4) of the Act each registered location/branch is a distinct person. Therefore, on the above basis of being distinct persons under the Act, they have in cases of Delhi locations and Karnataka locations (as informed by Shri. Nankani, the learned Senior Counsel), the Petitioner has filed   separate   Petitions.   Moreover,   the   Commissioners   at separate locations/branches  (except  Mumbai)  are  not parties before us. Therefore, appropriate orders from the jurisdictional Commissioners  on the basis  of  the certificates issued by  the Mumbai   Commissionerate   be   obtained   by   the   Petitioners locations/branches subject to the satisfaction of the concerned Commissioners in accordance with law.


  1. Liberty to apply. The Petition expedited.

Free Trial

Are you looking for the Latest Rules, Notifications, and Case Laws?

Book your 7 days free trial

Book Now