GST Portal Must Open: Court Orders Compliance for CENVAT Credit Filing

Get the full picture - access the original judgement of the court order here

Case Name

Mangla Hoist P. Ltd. vs. Union of India and Ors.

Court Name: High Court of Delhi at New Delhi

Case No.: W.P.(C) 3572/2020 and CM APPL. 12707/2020

Decided on: 17th June 2020

Key Takeaways

1. Technical glitches are a valid excuse — The petitioner couldn’t file Form GST Trans-1 due to errors and technical difficulties on the government’s own portal.

2. Rule 117 of CGST Rules, 2017 is directory, not mandatory — This means the 90-day time limit for filing Trans-1 is not a hard deadline. It was already established in the earlier Brand Equity Treaties Limited case.

3. Government must comply with court orders — Even though the government was planning to appeal the earlier judgment, since it hadn’t been stayed, they were still bound to follow it.

4. Portal must be opened — The court directed the respondents to open the common GST portal to allow the petitioner and all similarly placed assessees to upload Form GST Trans-1 by 30th June 2020.

5. Publicising the judgment is mandatory — The respondents were also directed to publicise the earlier judgment and upload it on their website.

Issue

The central legal question here is:

Should the GST authorities be directed to open the common portal to allow the petitioner to file its CENVAT credit claim in Form GST Trans-1, especially when technical difficulties prevented timely filing and the time limit under Rule 117 of the CGST Rules, 2017 has already been held to be directory (not mandatory)?

In simpler terms — Can the government refuse to open the portal when a taxpayer couldn’t file due to technical issues on the government’s own system? The court said NO, the government cannot refuse.

Facts

• Mangla Hoist P. Ltd. is a company that needed to file its CENVAT tax credit claim as of 30th June 2017 (the date GST was introduced in India) using Form GST Trans-1 on the government’s GST portal.
• Despite repeated efforts, the company could not upload the form because of errors and technical difficulties on the portal itself — so this wasn’t the company’s fault!
• The company made repeated requests to the authorities to extend the deadline, but the government refused to extend it.
• Meanwhile, a coordinate bench of the same Delhi High Court had already decided on 5th May 2020 in W.P.© 11040/2018 — Brand Equity Treaties Limited vs. Union of India that the 90-day time limit in Rule 117 of the CGST Rules is directory (flexible), not mandatory. That court had also directed the portal to be opened until 30th June 2020.
• However, the government did not comply with that earlier order — they didn’t publicise the judgment, didn’t upload it on their website, and didn’t open the portal.
• This forced Mangla Hoist P. Ltd. to come to court again and file this fresh petition.
• The government’s lawyer also pointed out a minor procedural issue — the petitioner had named the wrong Commissioner (Delhi South instead of Delhi East) as a respondent.

Arguments

Petitioner’s Side (Mangla Hoist P. Ltd.)

• The company tried multiple times to upload Form GST Trans-1 but couldn’t due to technical errors on the portal.
• The government refused to extend the deadline despite requests from multiple parties.
• The earlier judgment in Brand Equity Treaties Limited had already directed the portal to be opened and the judgment to be publicised, but the government failed to comply.
• Therefore, the petitioner was left with no choice but to approach the court again for directions.

Respondents’ Side (Union of India & Others)

• The government’s lawyer pointed out that the wrong Commissioner was impleaded — it should have been Commissioner, CGST Delhi East, not Delhi South.
• The government stated that they had decided to challenge the judgment in Brand Equity Treaties Limited and were in the process of filing an appeal before the Supreme Court.

Key Legal Precedents

1. Brand Equity Treaties Limited vs. Union of India

W.P.© 11040/2018 — Delhi High Court (Division Bench), decided on 05.05.2020

This is the most critical precedent in this case. Here’s what it established:

• The 90-day time limit prescribed under Rule 117 of the CGST Rules, 2017 for filing Form GST Trans-1 is not mandatory but directory in nature.
• The respondents were directed to publicise the judgment and upload it on their website so that all assessees who couldn’t upload Form GST Trans-1 could do so on or before 30th June 2020.

How it was applied here: The court in the present case relied entirely on this precedent. Since the Brand Equity judgment had not been stayed, the court held that the government was bound to comply with its directions. The government’s intention to appeal did not give them the right to ignore the order.

2. Rule 117 of the CGST Rules, 2017

This rule prescribed the time limit of 90 days for filing transitional credit claims in Form GST Trans-1. The petitioner also sought to have this rule declared ultra vires (beyond legal authority) and quashed. However, since the Brand Equity judgment had already addressed this by holding the rule to be directory, the court resolved the matter through compliance directions rather than striking down the rule.

Judgement

The Petitioner (Mangla Hoist P. Ltd.) WON

1. The court noted that the Brand Equity Treaties Limited judgment had NOT been stayed, which meant the government was still legally obligated to follow it.

2. The court directed the respondents to:

• Open the common GST portal to allow the petitioner and all similarly placed assessees to upload Form GST Trans-1 for claiming CENVAT tax credit.
• Publicise the Brand Equity judgment and upload it on their website.
• Ensure all of this was done by 19th June 2020 — giving taxpayers at least 10 clear days before the 30th June 2020 deadline.

3. The petition was disposed of (resolved) along with the pending application (CM APPL. 12707/2020).

4. No order as to costs — meaning neither party was asked to pay the other’s legal costs.

The judgment was delivered by Hon’ble Ms. Justice Hima Kohli and Hon’ble Mr. Justice Subramonium Prasad.

FAQs

Q1: What is Form GST Trans-1?

Form GST Trans-1 is a transitional form that businesses had to file when India switched to the GST regime on 1st July 2017. It allowed businesses to claim credit for taxes (like CENVAT) they had already paid under the old tax system.

Q2: What is CENVAT credit?

CENVAT (Central Value Added Tax) credit is a credit that manufacturers and service providers could claim for taxes paid on inputs under the pre-GST regime. The Trans-1 form allowed them to carry this credit forward into the GST system.

Q3: Why couldn’t the petitioner just file the form on time?

The petitioner tried repeatedly but faced technical errors on the government’s own portal. This was not the company’s fault — the system itself was not working properly.

Q4: What is Rule 117 of the CGST Rules, 2017?

This rule set a 90-day time limit for filing Form GST Trans-1. The earlier Brand Equity Treaties Limited judgment held that this time limit is directory (a guideline), not mandatory (a strict deadline), meaning courts can allow filing beyond this period in genuine cases.

Q5: The government said it was going to appeal the Brand Equity judgment — does that mean they didn’t have to follow it?

No! The court clearly stated that since the Brand Equity judgment had not been stayed, the government was still fully obligated to comply with it. Just planning to appeal doesn’t suspend a court order.

Q6: What does “directory” vs. “mandatory” mean in legal terms?

A mandatory provision is one that must be strictly followed — failure to comply has serious legal consequences. A directory provision is more of a guideline — courts have the flexibility to allow deviations in genuine cases without invalidating the action.

Q7: What was the significance of the 19th June 2020 deadline set by the court?

The court set 19th June 2020 as the compliance deadline specifically to ensure that taxpayers would have at least 10 clear days (before the 30th June 2020 cut-off) to actually log in and file their Trans-1 forms.

Q8: Did the court strike down Rule 117?

The petitioner had asked for Rule 117 to be declared ultra vires and quashed. However, the court resolved the matter through compliance directions based on the Brand Equity precedent, without expressly striking down the rule in this order.

1. The petitioner seeks directions to the respondents/Union of India;

Commissioner, CGST, Delhi South; Superintendent of Range and Goods

and Services Tax Council to open the Portal to enable it to file its claim of CENVAT tax credit as on 30th June, 2017, in Form Trans-1. The second

relief in the present petition is for declaring Rule 117 of the CGST Rules,

2017 as ultra vires and quashing the same.

2. Mr. Bhatia, learned counsel for the petitioner states that despite

repeated efforts made by the petitioner to upload its claim for credit in Form GST Trans-1 on the portal of the respondents, it could not do so due to

errors in their system including technical difficulties faced in uploading

credit Form GST Trans-1. He submits that despite repeated requests made

to the respondents by several parties to extend the last date for filing the

claim of credit input in Form GST Trans-1, they have refused to extend the

deadline.

3. Recently, a Division Bench of this Court in W.P.(C) 11040/2018

entitled Brand Equity Treaties Limited vs. Union of India has held on

05.05.2020, that the time limit of 90 days prescribed in Rule 117 of the

CGST Rules is not mandatory but directory in nature. Further, the

respondents have been directed to publicise the said judgment including by

uploading it on their website so that all the Assessees, who were unable to

upload Form/GST Trans-1, could do so on or before 30th June, 2020.

4. Learned counsel for the petitioner states that despite the aforesaid

categorical order passed by the co-ordinate bench, the respondents have not

made compliances and the petitioner has been compelled to approach this

court for seeking directions to the respondents to open the common portal to

enable it to upload its claim in Form GST Trans-1 well before 30.06.2020.

5. Issue Notice.

6. Mr.Kuldeep Singh, learned counsel for the respondents enters

appearance and starts by stating that the petitioner has erroneously

impleaded the Commissioner, Central Goods and Service Tax, Delhi South

as the respondent No.2 whereas the petitioner falls under the jurisdiction of the Commissioner, Central Goods and Service Tax Delhi East. He further

states that the respondents have decided to challenge the judgment in Brand Equity Treaties Limited (supra) and are in the process of filing an appeal

before the Supreme Court.

7. Admittedly, the judgment in Brand Equity Treaties Limited (supra),

has not been stayed so far and therefore, the respondents are under an

obligation to abide by the directions issued therein by adequately publicising the said decision and uploading it on their website as also by opening its common portal to enable the petitioner and all similarly placed parties to upload Form GST Trans-1, for claiming CENVAT tax credit. The

respondents are directed to ensure compliance of the captioned judgment by

19.06.2020, particularly since the cut of date fixed by the court in the said case is 30th June, 2020, which would leave only ten clear days for the

petitioner and similarly placed assessees to take necessary steps.

8. The present petition is disposed of along with the pending application

with the aforesaid directions. No orders as to costs.

HIMA KOHLI, J

SUBRAMONIUM PRASAD, J

JUNE 17, 2020