GST Portal Closed? Delhi HC Keeps Hope Alive for Rehau Polymers’ Tran-1 Filing

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Case Name

Rehau Polymers Private Limited v. Union of India Through Secretary Ministry of Finance Department of Revenue & Ors.

Court Name: High Court of Delhi at New Delhi

Case No.: W.P.(C) 3824/2020

Date of Order: 30.06.2020

Coram: Hon’ble Mr. Justice Vipin Sanghi & Hon’ble Mr. Justice Rajnish Bhatnagar

Key Takeaways

1. GST Tran-1 Filing Deadline Was a Real Concern: The petitioner was worried that the deadline of 30th June 2020 would pass, making it impossible to file the Tran-1 form and claim transitional ITC.

2. Court Declined Immediate Relief: The Delhi HC was not willing to order provisional manual filing of the GST Tran-1 Form at this stage, given that the Brand Equity Treaties Limited decision was stayed by the Supreme Court.

3. Court Preserved Future Rights: Crucially, the court clarified that if the Supreme Court upholds the Brand Equity Treaties Limited decision, the Delhi HC would not be powerless to direct the respondents to accept the Tran-1 form at a later point in time.

4. Respondents Reserved Their Right to Contest: The government’s counsel indicated that even if Brand Equity Treaties Limited is upheld, the petitioner may still not be entitled to relief — this issue was left open for future hearing.

5. Matter Listed for Future Hearing: The case was listed for 16.09.2020 along with other similar matters.

Issue

Should the GST portal be opened (or manual filing be allowed) to enable Rehau Polymers to upload its GST Tran-1 Form, even though the key precedent supporting such relief (Brand Equity Treaties Limited) was stayed by the Supreme Court?

In simpler terms — can a taxpayer be allowed to file the Tran-1 form (to claim old ITC) when the deadline is about to expire, even when the legal basis for doing so is under challenge at the Supreme Court?

Facts

• Rehau Polymers Private Limited is a company that wanted to claim transitional input tax credit by filing the GST Tran-1 Form on the GST portal.
• The GST Tran-1 form is critical — it allows businesses to carry forward tax credits from the pre-GST era into the new GST system.
• The problem? The GST portal was not open for uploading this form, and the deadline of 30th June 2020 was fast approaching.
• Rehau Polymers filed a writ petition before the Delhi High Court, asking the court to direct the respondents (Union of India and related authorities) to open the portal.
• The petitioner relied on a previous Delhi HC decision — Brand Equity Treaties Limited Vs. The Union of India & Ors., W.P.© No. 11040/2018 — decided on 05.05.2020, which had ruled in favour of taxpayers in similar situations.
• However, there was a catch: the Brand Equity Treaties Limited decision was challenged before the Supreme Court, and the Supreme Court had stayed the operation of that decision.
• The writ petition was filed and listed on 30.06.2020 — the very deadline date itself!

Arguments

Petitioner’s Arguments (Rehau Polymers):

1. The GST portal should be opened to allow them to upload the Tran-1 Form.

2. Even though the Brand Equity Treaties Limited decision is stayed, the court should allow provisional manual filing of the Tran-1 Form.

3. If the Supreme Court ultimately upholds the Brand Equity Treaties Limited decision, the government should not be allowed to use the expiry of the 30th June 2020 deadline as an excuse (fait accompli) to deny relief to the petitioner.

Respondents’ Arguments (Union of India & Others):

1. The Brand Equity Treaties Limited decision — which the petitioner was relying upon — is currently stayed by the Supreme Court, so it cannot be used as a basis for relief right now.

2. Even if the Supreme Court ultimately upholds the Brand Equity Treaties Limited decision, the petitioner may still not be entitled to the specific relief sought in this petition — this was a reservation made by Ms. Sonu Bhatnagar on behalf of respondents No. 2 & 4.

Key Legal Precedents

1. Brand Equity Treaties Limited Vs. The Union of India & Ors., W.P.© No. 11040/2018 (Decided by Delhi High Court on 05.05.2020)

• This is the central precedent in this case.
• The Delhi HC had decided this case (along with other connected writ petitions) on 05.05.2020, and it appears to have ruled in favour of taxpayers seeking to file GST Tran-1 forms.
• The petitioner, Rehau Polymers, relied heavily on this decision to support their claim.
• However, this decision was challenged before the Supreme Court via a Special Leave Petition (SLP) by the respondents (government), and the Supreme Court stayed the operation of this decision.
• The Delhi HC in the present case noted that since the Brand Equity Treaties Limited decision was stayed, it could not immediately grant the relief sought by the petitioner.
• But the court also noted that if the SLP is rejected and the Delhi HC decision is upheld, the court would still retain the power to grant relief to Rehau Polymers at a later stage.

Judgement

1. Immediate Relief Denied: The court was not inclined to pass any direction for provisional manual filing of the GST Tran-1 Form, given that the Brand Equity Treaties Limited decision (the basis for such relief) was stayed by the Supreme Court.

2. Future Relief Preserved: The court made an important observation — since Rehau Polymers had approached the court before 30th June 2020 (and the matter was listed on that very date), if the Supreme Court ultimately upholds the Brand Equity Treaties Limited decision, the Delhi HC would not be powerless to direct the respondents to accept the Tran-1 Form at a later point in time. This was a significant protective observation for the petitioner.

3. Government’s Reservation Noted: The respondents’ submission that the petitioner may not be entitled to relief even if Brand Equity Treaties Limited is upheld was noted and left open for consideration at the next hearing.

4. Procedural Orders:

• C.M. No. 13701/2020 (Court fee exemption) — Allowed, subject to all just exceptions. Court fees to be paid within a week.
• C.M. No. 13702/2020 (Another exemption application) — Allowed, subject to all just exceptions.
• Notice issued to respondents (already accepted by their respective counsels).
• Matter listed on 16.09.2020 along with other similar matters.

In short: Neither side fully won or lost at this stage. The petitioner didn’t get immediate relief, but the court kept the door open for future relief. The matter was adjourned to September 2020.

FAQs

Q1: What is the GST Tran-1 Form, and why is it important?

The GST Tran-1 Form is a transitional form that businesses had to file when India switched to the GST regime. It allowed them to carry forward input tax credits (ITC) accumulated under the old tax system (like VAT, excise duty, etc.) into the new GST system. Missing this filing could mean losing significant tax credits.

Q2: Why couldn’t the court just order the portal to be opened?

Because the main legal precedent supporting such an order — the Brand Equity Treaties Limited decision — was stayed by the Supreme Court. The Delhi HC couldn’t act against a Supreme Court stay order.

Q3: What does “fait accompli” mean in this context?

The petitioner’s lawyer used this French legal term to argue that the government should not be allowed to use the passage of the deadline (30th June 2020) as an excuse to deny relief later. In other words, the government shouldn’t be able to say “the deadline has passed, so nothing can be done now” if the Supreme Court ultimately rules in the petitioner’s favour.

Q4: Did the petitioner win or lose?

It’s a mixed result at this stage. The petitioner did not get immediate relief, but the court preserved their right to seek relief in the future, depending on the Supreme Court’s decision in the Brand Equity Treaties Limited case.

Q5: What happens next?

The matter was listed for 16.09.2020 along with other similar cases. The outcome would largely depend on what the Supreme Court decides in the Brand Equity Treaties Limited Special Leave Petition.

Q6: Who were the judges in this case?

The order was passed by a Division Bench comprising:

• Hon’ble Mr. Justice Vipin Sanghi
• Hon’ble Mr. Justice Rajnish Bhatnagar

C.M. No. 13701/2020

Exemption allowed, subject to all just exceptions.

The Court Fees be paid within a week.

The application stands disposed of.

C.M. No. 13702/2020

Exemption allowed, subject to all just exceptions.

The application stands disposed of.

W.P.(C) 3824/2020 and C.M. No. 13700/2020

Issue notice. Mr. Digpaul accepts notice on behalf of respondents

No.1 & 3 and Ms. Sonu Bhatnagar accepts notice on behalf of respondents

No.2 & 4.

The petitioner has preferred this writ petition to seek a direction to the

respondents to open the GST portal to enable the petitioner to upload the

GST Tran-I Form. The petitioner has placed reliance on the decision of this

Court in Brand Equity Treaties Limited Vs. The Union of India & Ors.,

W.P.(C.) No. 11040/2018, and other connected writ petitions decided on

05.05.2020. Admittedly, that decision in Brand Equity Treaties Limited

(supra) is pending consideration before the Supreme Court, and the

operation of the said decision has been stayed by the Supreme Court.

The submission of learned counsel for the petitioner is that, even in

these circumstances, this Court may permit provisional manual filing of the

GST Tran-I Form in terms of our decision in Brand Equity Treaties Limited

(supra). He submits that in case the Supreme Court upholds the decision of

this Court in Brand Equity Treaties Limited (supra), the respondents should

not be permitted to present a fait accompli by pleading that 30th June, 2020

has already passed.

We are not inclined to pass any such direction as sought by the

petitioner. However, considering the fact that the petitioner has approached

this Court by filing the writ petition before 30.06.2020 – which has been

listed on 30.06.2020, in case the Special Leave Petition – preferred by the

respondents before the Supreme Court against the decision in Brand Equity

Treaties Limited (supra) is rejected, and our decision is upheld, it goes

without saying that this Court would not be powerless to direct the

respondents to accept the GST Tran-I Form of the petitioner at a later point

of time.

Ms. Sonu Bhatnagar submits that – even if the decision in Brand

Equity Treaties Limited (supra) is upheld, according to the respondents, the

petitioner would not be entitled to the relief as sought in the petition. This aspect would be considered as and when the writ petition is taken up for hearing.

List on 16.09.2020 along with other similar matters.

VIPIN SANGHI, J

RAJNISH BHATNAGAR, J

JUNE 30, 2020