08.03.2022- Technical Glitches Of The GST Portal Cannot Take Away The Vested Right Of Input Tax Credit Of The Assessee: Gujarat HC

The Hon’ble High Court of Gujarat vide its order dated 11.02.2022 in the matter of M/s Bodal Chemicals Ltd.  Vs. Union of India in R/Special Civil Application No. 9151 of 2021 held that Input Tax credit is a vested right of the assessee and cannot be taken away on account of technical glitches and the department cannot raise their hands in despair saying that it is not possible to take care of the technical glitches.

The writ applicant preferred the present writ petition seeking directions to respondents to allow it to file the GSTR-6 returns with the details of the ISD credit of Rs. 20,52,989/- and to allow the petitioner to avail and distribute the same.

Facts:

  • The writ applicant is engaged in the business of Chemical products like – H-Acid, Vinyl Sulphone, Dyes etc. and registered as Input Service Distributor (ISD) under the CENVAT Credit rules for availing and distributing the credit to its units.
  • That on introduction of GST, the writ applicant filed GST TRAN-1 for transferring and carrying forward the balance of CENVAT Credit lying with it including the un-utilized balance of ISD amounting to Rs. 20,52,989/-.
  • The writ applicant filed a return in GSTR-6 with details of balance lying in the CENVAT Credit lying on 30.06.2017 for transferring such Credit to GST regime. However, due to some technical error on the GST network the balance in return is showing as Rs. 2,96,528/- and balance of ISD credit of Rs. 20,52,989/- was not included in the balance of ISD credit.
  • That over a period of time the writ applicant has been requesting the Nodal Officer and the jurisdictional Assistant Commissioner to correct the same and made several representations in that regard, however the needful was not done. Hence, the applicant approached before the Hon’ble High Court with the present writ petition.

Held:

  • The Hon’ble High Court after considering the submissions made from the both sides and the facts of the case noted that the it has been stated on the behalf of the respondents that the writ applicant cannot redress any grievance as it failed to follow the due procedure for distributing the Tran-1 credit, thus the writ applicant would not be allowed to avail the transitional Credit.
  • Thereafter, the Hon’ble High Court referring to the decision of M/s Vishnu Aroma Pouching Pvt. Ltd.   Union of India – Special Civil Application No. 5629 of 2019 decided on 14.11.2019, in which the identical issue was decided by the Coordinate Bench, held that the respondent cannot raise their hands in despair saying that it is not possible to take care of the technical glitches.
  • The Writ applicant is running pillar to post requesting the respondents to take care of the technical glitch occurred at the time of filing of GSTR-6 return for recording and distributing the ISD credit of Rs. 20,52,989/- however till date he has not been allowed to distribute aforesaid ISD credit.
  • The Hon’ble High Court further observed that it has been rightly contended on the behalf of the writ applicant that the credit of such tax already paid to the credit of the Central Government is its vested right and cannot be defeated on account of any irregularity in the system evolved by the Government.

The Hon’ble High Court with the above finding allowed the Writ petition filed by petitioner with the directions to respondents to allow the petitioner to file the GSTR-6 return manually with the details of ISD credit in dispute and also permit the distribution of the same. The entire exercise to be undertaken within a period of six weeks from the date of receipt of writ of this order.

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