GST Transitional Credit Win: Firm Gets Right to Upload TRAN-1 Despite Missing Deadline

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Case Name

Amba Industrial Corporation vs. Union of India & Anr.

Court Name: High Court of Punjab & Haryana at Chandigarh

Case No.: CWP No. 8213 of 2020 (O&M)

Date of Decision: 18th June 2020

Key Takeaways

1. CENVAT Credit is a Vested Right: The court affirmed that unutilized CENVAT credit accumulated before GST is a property right protected under Article 300A of the Constitution of India and cannot simply be taken away by a rule prescribing a time limit.

2. Rule 117(1A) is Arbitrary: The restriction in Sub-Rule (1A) of Rule 117 — which limits deadline extensions only to “technical difficulties on the common portal” — was found to be arbitrary, vague, and unreasonable, violating Article 14 of the Constitution.

3. Government Cannot Have Double Standards: The court strongly held that the government cannot apply one standard to taxpayers and a different standard to itself. If the government repeatedly extended deadlines for “technical glitches,” it cannot deny the same relief to taxpayers who couldn’t upload due to other genuine difficulties.

4. Transition to GST Was Challenging for Everyone: The court acknowledged that the shift to GST was a massive, unprecedented change. Taxpayers — especially those without internet access or technical knowledge — faced genuine difficulties adapting to the fully online system.

5. Portal Opening or GSTR-3B Alternative: The court gave a practical two-step remedy — either the government opens the portal for TRAN-1 upload, or the petitioner can directly claim the ITC in GSTR-3B of July 2020.

Issue

The central legal question: Can the government deny a taxpayer the right to carry forward their legitimately earned CENVAT credit into the GST regime, simply because they missed the deadline to file Form TRAN-1, especially when the restriction under Rule 117(1A) is arguably arbitrary and unconstitutional?

More specifically:

• Is Rule 117(1A) of the CGST Rules, 2017 constitutionally valid?
• Should the petitioner be allowed to upload TRAN-1 or claim ITC in GSTR-3B despite missing the deadline of 27th December 2017?

Facts

• Who is the Petitioner? Amba Industrial Corporation is a partnership firm engaged in the trading of S.S. Flats (Stainless Steel Flats).

• Pre-GST Registration: Before GST came into effect on 1st July 2017, the firm was registered under the Central Excise Act, 1944 as a dealer/trader.

• The Credit at Stake: The firm had purchased S.S. Flats and Scrap and paid Excise Duty of Rs. 10,36,201/-. This created a CENVAT credit balance that they were entitled to carry forward into the GST regime.

• The Deadline Missed: Under Section 140 of the CGST Act read with Rule 117(1), taxpayers had to upload Form TRAN-1 on the GST portal to carry forward their old credits. The last date was 27th December 2017, and the petitioner missed this deadline.

• What is Rule 117(1A)? This sub-rule allows the Commissioner, on the recommendation of the GST Council, to extend the deadline — but only for registered persons who couldn’t file due to "technical difficulties on the common portal."

• Government’s Own Extension: Interestingly, the government itself, by an order dated 7th February 2020, had extended the TRAN-1 filing date to 31st March 2020 for certain taxpayers under this very rule.

• The Petition: The firm approached the High Court challenging the constitutional validity of Rule 117(1A) and seeking permission to either upload TRAN-1 or claim ITC in their monthly GSTR-3B return.

Arguments

Petitioner’s Arguments (Amba Industrial Corporation)

1. Covered by Precedent: The petitioner’s counsel, Mr. Deepak Gupta, argued that the issue was already settled by the Punjab & Haryana High Court’s own judgment in Adfert Technologies Pvt. Ltd. vs Union of India (2019-TIOL-2519-HC-P&H-GST).

2. Delhi High Court Support: The Delhi High Court in Brand Equity Treaties Ltd. and others vs. Union of India (2020-TIOL-900-HC-Del-GST) had followed the Punjab & Haryana HC decision and permitted taxpayers to file TRAN-1 on or before 30th June 2020.

3. SKH Sheet Metals Decision: The Delhi HC had further, vide order dated 16th June 2020 in SKH Sheet Metals Components vs. Union of India (WP© 13151 of 2019), approved its earlier position and permitted TRAN-1 filing till 30th June 2020.

4. Rule 117(1A) is Arbitrary: The restriction to only “technical difficulties on the common portal” is too narrow and discriminatory — it violates Article 14 of the Constitution.

5. CENVAT Credit is Property: The accrued CENVAT credit is a vested property right under Article 300A of the Constitution and cannot be taken away by a delegated legislation (a rule) without statutory backing.

Respondents’ Arguments (Union of India & GST Authorities)

The respondents — represented by Mr. Satya Pal Jain (Additional Solicitor General), Mr. Dheeraj Jain, and Mr. Sharan Sethi (Senior Standing Counsel) — were notably unable to controvert the petitioner’s position. They could not dispute that the issue was squarely covered by the Adfert Technologies and Brand Equity judgments.

The government’s general stance (as reflected in the Brand Equity judgment quoted by the court) was:

• “Technical difficulty” should be interpreted narrowly — only as technical glitches on the GST common portal.
• Nodal Officers found no GST system logs showing the petitioner had even attempted to upload TRAN-1.
• The deadline of 90 days was a reasonable restriction.

Key Legal Precedents

1. Adfert Technologies Pvt. Ltd. vs Union of India (2019-TIOL-2519-HC-P&H-GST) — Punjab & Haryana High Court

This was the landmark precedent from the same court. A Division Bench (which included Justice Jaswant Singh, one of the judges in the present case) had, vide order dated 4th November 2019, allowed a bunch of petitions including CWP No. 30949 of 2018. The court had directed the government to open the portal for TRAN-1 uploads, and if it failed to do so, allowed taxpayers to claim ITC in GSTR-3B. The Revenue’s SLP before the Supreme Court was dismissed on 28th February 2020, making this precedent binding.

2. Brand Equity Treaties Ltd. and others vs. Union of India (2020-TIOL-900-HC-Del-GST) — Delhi High Court

The Delhi HC followed the Punjab & Haryana HC’s decision and multiple other High Courts. It held that Sub-Rule (1A) of Rule 117 was arbitrary, vague, and unreasonable as it violated Article 14 of the Constitution. Key findings included:

• “Technical difficulty” is a broad term and cannot be restricted only to glitches on the GST portal.
• The government cannot apply different standards to itself and to taxpayers.
• CENVAT credit is a vested property right under Article 300A.
• The time limit for TRAN-1 cannot be discriminatory or unreasonable.
• The court directed all similarly situated taxpayers to be permitted to file TRAN-1 on or before 30th June 2020.

3. SKH Sheet Metals Components vs. Union of India

WP(C) 13151 of 2019 — Delhi High Court (Order dated 16th June 2020)

Just two days before the present judgment, the Delhi HC reaffirmed its position in Brand Equity and permitted the petitioner to revise TRAN-1 on or before 30th June 2020.

4. A.B. Pal Electricals (Supra) — Referenced in Brand Equity judgment

This case was cited within the Brand Equity judgment to emphasize that CENVAT credit standing in favour of an assessee is a vested property right under Article 300A of the Constitution and cannot be taken away by prescribing a time limit for availing it.

Key Statutory Provisions Referenced:

Section 140 of CGST Act, 2017

Allows carry-forward of CENVAT credit from pre-GST regime

Rule 117(1) of CGST Rules, 2017

Prescribes the procedure and deadline for filing TRAN-1

Rule 117(1A) of CGST Rules, 2017

Allows Commissioner to extend deadline — but only for “technical difficulties on common portal”

Article 14 of the Constitution

Right to Equality — violated by arbitrary/discriminatory rule

Article 300A of the Constitution

Right to property — CENVAT credit is a vested property right

Limitation Act, 1963

Civil rights can be enforced within 3 years — used to argue that 90-day limit for TRAN-1 is unreasonably short

Judgment

The Petitioner — Amba Industrial Corporation — WON

What Did the Court Decide?

The Punjab & Haryana High Court allowed the petition and gave the following directions:

1. The Respondents are directed to permit the Petitioner to upload TRAN-1 on or before 30th June 2020.

2. If the Respondents fail to open the portal, the Petitioner would be at liberty to avail the ITC in question in GSTR-3B of July 2020.

3. The Respondents retain the right to verify the genuineness of the claims made by the Petitioner.

Why Did the Court Rule This Way

• The issue was squarely covered by the earlier judgment in Adfert Technologies (whose SLP was dismissed by the Supreme Court) and the Delhi HC’s Brand Equity decision.

• The court did not strike down Rule 117(1A) as unconstitutional, but held that the petitioner was entitled to carry forward their CENVAT credit accrued under the Central Excise Act, 1944.

• The government’s own repeated extensions of the TRAN-1 deadline for “technical glitches” vindicated the petitioner’s claim — denying credit to those who couldn’t prove a portal-side technical glitch would violate Article 14 (equality) and Article 300A (property rights) of the Constitution.

FAQs

Q1: What is TRAN-1 and why is it so important?

TRAN-1 (Transitional Credit Form) is a form that businesses had to file when GST was introduced to carry forward their old tax credits (CENVAT credit) from the pre-GST era into the new GST system. Missing this form meant losing legitimately earned tax credits worth lakhs of rupees.

Q2: Why did the petitioner miss the deadline?

The judgment doesn’t specify the exact reason the petitioner missed the 27th December 2017 deadline. However, the court acknowledged the broader context — the GST transition was a massive, unprecedented shift to a fully online system, and many taxpayers faced genuine difficulties adapting to it.

Q3: Did the court declare Rule 117(1A) unconstitutional?

No. The court chose not to declare Rule 117(1A) invalid, but it effectively treated it as violating Article 14 of the Constitution (as the Delhi HC had done in Brand Equity) by being arbitrary and discriminatory. The petitioner was granted relief on other grounds.

Q4: What happens if the government doesn’t open the portal by 30th June 2020?

The court provided a clear alternative — the petitioner can directly claim the ITC in their GSTR-3B return for July 2020. This is a practical fallback remedy.

Q5: Can the government verify the petitioner’s claims?

Yes! The court explicitly stated that the Respondents are at liberty to verify the genuineness of the claims made by the petitioner. So the relief is not unconditional — the credit must be legitimate.

Q6: Does this judgment help other taxpayers in similar situations?

Absolutely! This judgment follows a long line of similar decisions. The Delhi HC in Brand Equity had already directed the government to permit all similarly situated taxpayers to file TRAN-1 by 30th June 2020. This case adds to that growing body of precedent.

Q7: What is the significance of the Supreme Court dismissing the SLP in Adfert Technologies?

When the Supreme Court dismissed the government’s Special Leave Petition (SLP) against the Adfert Technologies judgment, it effectively upheld the High Court’s decision, making it a very strong precedent that lower courts and other High Courts are bound to follow.

Q8: What does “Article 300A” mean in simple terms?

Article 300A of the Indian Constitution says that no person shall be deprived of their property except by authority of law. The courts held that CENVAT credit is a form of property — it’s money the taxpayer has already paid as tax. Taking it away by simply prescribing a short deadline in a rule (not even in the main Act) is unconstitutional.

Hearing conducted through Video Conferencing.

1. The Petitioner through instant petition is challenging vires of

Rule 117(1A) of Central Goods and Service Tax Act, 2017 (for short

‘Rules’) and seeking direction to Respondent to permit Petitioner to

electronically upload form TRAN-I or avail input tax credit (for short ‘ITC’) in monthly return GSTR-3B.

2. The Petitioner-a partnership firm, engaged in the business of

trading of S.S. Flats, is registered with Respondent-GST Authorities under

Central Goods and Services Tax Act, 2017 (for short ‘CGST Act’). The

Petitioner prior to 01.07.2017 i.e. date of introduction of GST was

registered under Central Excise Act, 1944 as a dealer/trader. The Petitioner

purchased S.S. Flats and Scrap on payment of Excise Duty amounting to

Rs.10,36,201/-. The Petitioner to carry forward unutilized CENVAT Credit,

in terms of Section 140 of CGST Act read with Rule 117 (1) was required to

upload TRAN-I on the official portal of Respondent, however Petitioner

failed to upload TRAN-I by last date i.e. 27.12.2017. As per sub-Rule (1A)

of Rule 117 of the Rules, the Commissioner on the recommendation of the

Council may extend date for submitting the declaration, in respect of

registered persons who could not submit declaration by the due date on

account of technical difficulties. The Respondents in exercise of power

conferred by sub-Rule (1A) of Rule 117 of the Rules, by order dated

07.02.2020 (Annexure P-3) has extended date for filing TRAN-I till

31.03.2020.

3. Counsel for the Petitioner contended that issue involved is

squarely covered by judgment of this Court in the case of Adfert

Technologies Pvt. Ltd. Vs Union of India 2019-TIOL-2519-HC-P&H-

GST. The SLP filed against aforesaid decision stands dismissed. Delhi High

Court in the case of Brand Equity Treaties Ltd. and others vs. Union of

India 2020-TIOL-900-HC-Del-GST following decision of this Court and

various other High Courts has permitted Petitioners to file TRAN-I on or

before 30.06.2020. Delhi High Court has further directed Respondents to

permit all other similarly situated tax payers to file TRAN-I on or before

30.06.2020. Delhi High Court has further vide order dated 16.06.2020 in

SKH Sheet Metals Components vs. Union of India WP(C) 13151 of 2019

approved its earlier opinion in the case of Brand Equity and permitted

Petitioners to file TRAN-I till 30.06.2020.

4. Notice of motion.

5. Mr. Satya Pal Jain, Additional Solicitor General assisted by Mr.

Dheeraj Jain, Advocate accepts notice on behalf of respondent no.1 while

Mr. Sharan Sethi, Senior Standing Counsel accepts notice for respondent

no.2-Commissioner of Central Goods & Services Tax. They are unable to

controvert the fact that the issue in hand is squarely covered by the

judgment of this Court in Adfert Technologies Pvt. Ltd. (Supra) and of

the Delhi High Court in the case of Brand Equity (Supra).

6. Having heard learned Counsel for the parties and perused the

cited judgments, we are of the considered opinion that issue involved is

squarely covered by judgments of this Court as well as of the aforesaid

judgments of Delhi High Court.

7. A Division Bench of this Court consisting one of us (Jaswant

Singh J) vide order dated 4.11.2019 allowed a bunch of petitions which

included CWP No. 30949 of 2018 titled as Adfert Technologies Pvt. Ltd.

Vs Union of India. The revenue assailing decision of this court filed SLP

before Hon’ble Supreme Court which stands dismissed vide order dated

28.02.2020. Following opinion in Adfert Technologies (Supra) a number

of writ petitions involving identical question have been disposed of by this

Court, wherein Respondents have been directed to open portal so that

assessee may upload TRAN-I and in case Respondent fails to open portal,

Petitioners have been permitted to take ITC in monthly return GSTR-3B.

Division Bench of Delhi High Court in the case of SKH Sheet Metals

Components vs. Union of India WP(C) 13151 of 2019, vide order dated

16.06.2020 has permitted Petitioner to revise TRAN-I on or before

30.06.2020. Delhi High Court while passing aforesaid order has relied upon

its recent decision in Brand Equity Treaties Ltd. and others vs. Union of

India (Supra) wherein Court had held that Government cannot adopt

different yardsticks while evaluating conduct of the tax payers and its own

conduct, acts and omissions. It would be profitable to extract relevant

paragraphs of judgment of Delhi High Court in Brand Equity:

“18. In above noted circumstances, the arbitrary classification,

introduced by way of sub Rule (1A), restricting the benefit only to

taxpayers whose cases are covered by "technical difficulties on

common portal" subject to recommendations of the GST Council, is

arbitrary, vague and unreasonable. What does the phrase "technical

difficulty on the common portal" imply? There is no definition to this

concept and the respondent seems to contend that it should be

restricted only to "technical glitches on the common portal". We,

however, do not concur with this understanding. "Technical difficulty"

is too broad a term and cannot have a narrow interpretation, or

application. Further, technical difficulties cannot be restricted only to

a difficulty faced by or on the part of the respondent. It would include

within its purview any such technical difficulties faced by the

taxpayers as well, which could also be a result of the respondent's

follies. After all, a completely new system of accounting; reporting of

turnover; claiming credit of prepaid taxes; and, payment of taxes was

introduced with the implementation of the GST regime. A basket of

Central and State taxes were merged into a single tax. New forms

were introduced and, as aforesaid, all of them were not even

operationalised. Just like the respondents, even the taxpayers required

time to adapt to the new systems, which was introduced as a

completely online system. Apart from the shortcomings in the system

developed by GSTN Ltd., the assessees also faced the challenges

posed by low bandwidth and lack of computer knowledge and skill to

operate the system. It is very unfair on the part of the respondents, in

these circumstances, to expect that the taxpayers should have been

fully geared to deal with the new system on day-one, when they

themselves were completely ill-prepared, which led to creation of a

complete mess. The respondents cannot adopt different standards –

one for themselves, and another for the taxpayers. The GST regime

heralded the system of seamless input tax credits. The successful

migration to the new system was a formidable and unprecedented task.

The fractures in the system, after its launch, became visible as

taxpayers started logging in closer to the deadline. They encountered

trouble filing the returns. Petitioners who are large and mega

corporations - despite the aid of experts in the field, could not collate

the humongous data required for submission of the statutory forms.

Courts cannot be oblivious to the fact that a large population of this

country does not have access to the Internet and the filing of TRAN-1

was entirely shifted to electronic means. The Nodal Officers often

reach to the conclusion that there is no technical glitch as per their

GST system laws, as there is no information stored/logged that would

indicate that the taxpayers attempted to save/submit the filing of Form

GST TRAN-1. Thus, the phrase "technical difficulty" is being given a

restrictive meaning which is supplied by the GST system logs.

Conscious of the circumstances that are prevailing, we feel that

taxpayers cannot be robbed of their valuable rights on an unreasonable

and unfounded basis of them not having filed TRAN-1 Form within

90 days, when civil rights can be enforced within a period of three

years from the date of commencement of limitation under the

Limitation Act, 1963.

19. The introduction of Sub rule (1A) in Rule 117 is a patchwork

solution that does not recognise the entirety of the situation. It sneaks

in an exception, without addressing situations taken note of by us.

This exception, as worded, is an artificial construction of technical

difficulties, limiting it to those existing on the common portal. It is

unfair to create this distinction and restrict it to technical snags alone.

In our view, there could be various different types of technical

difficulties occurring on the common portal which may not be solely

on account of the failure to upload the form. The access to the GST

portal could be hindered for myriad reasons, sometimes not resulting

in the creation of a GST log-in record. Further, the difficulties may

also be offline, as a result of several other restrictive factors. It would

be an erroneous approach to attach undue importance to the concept of

"technical glitch" only to that which occurs on the GST Common

portal, as a pre-condition, for an assesee/tax payer to be granted the

benefit of Sub- Rule (1A) of Rule 117. The purpose for which Sub-

Rule (1A) to Rule 117 has been introduced has to be understood in the

right perspective by focusing on the purpose which it is intended to

serve. The purpose was to save and protect the rights of taxpayers to

avail of the CENVAT credit lying in their account. That objective

should also serve other taxpayers, such as the petitioners. The

approach of the Government should be fair and reasonable. It cannot

be arbitrary or discriminatory, if it has to pass the muster of Article 14

of the Constitution. The government cannot turn a blind eye, as if

there were no errors on the GSTN portal. It cannot adopt different

yardsticks while evaluating the conduct of the taxpayers, and its own

conduct, acts and omissions. The extremely narrow interpretation that

the respondents seek to advance, of the concept of "technical

difficulties", in order to avail the benefit of Sub Rule (1A), is contrary

to the statutory mechanism built in the transitory provisions of the

CGST Act. The legislature has recognized such existing rights and has

protected the same by allowing migration thereof in the new regime

under the aforesaid provision. In order to avail the benefit, no

restriction has been put under any provisions of the Act in terms of the

time period for transition. The time limit prescribed for availing the

input tax credit with respect to the purchase of goods and services

made in the pre-GST regime, cannot be discriminatory and

unreasonable. There has to be a rationale forthcoming and, in absence

thereof, it would be violative of Article 14 of the Constitution.

Further, we are also of the view that the CENVAT credit which stood

accrued and vested is the property of the assessee, and is a

constitutional right under Article 300A of the Constitution. The same

cannot be taken away merely by way of delegated legislation by

framing rules, without there being any overarching provision in the

GST Act. We have, in our judgment in A.B. Pal Electricals (supra)

emphasized that the credit standing in favour of the assessee is a

vested property right under Article 300A of the Constitution and

cannot be taken away by prescribing a time-limit for availing the

same. ”

Emphasis Supplied

In the above findings, Delhi High Court though has not

declared Rule 117 (1A) ultra vires the constitution, nonetheless treated as

violative of Article 14 of Constitution of India being arbitrary,

discriminatory and unreasonable.

8. The Petitioner has challenged vires of Rule 117 (1A) of Rules,

however we do not think it appropriate to declare it invalid as we are of the considered opinion that Petitioner is entitled to carry forward Cenvat Credit accrued under Central Excise Act, 1944. The Respondents have repeatedly extended date to file TRAN-I where there was technical glitch as per their understanding. Repeated extensions of last date to file TRAN-I in case of technical glitches as understood by Respondent vindicate claim of the Petitioner that denial of unutilized credit to those dealers who are unable to furnish evidence of attempt to upload TRAN-I would amount to violation of Article 14 as well Article 300A of the Constitution of India.

9. In view of decision of this Court in the case of Adfert

Technologies Pvt. Ltd. (Supra) and Delhi High Court in the case of Brand

Equity Treaties Ltd. (Supra) present petition deserves to be allowed and

accordingly allowed. The Respondents are directed to permit Petitioner to

upload TRAN-I on or before 30.06.2020 and in case Respondent fails to do

so, the Petitioner would be at liberty to avail ITC in question in GSTR-3B

of July 2020. No doubt, the respondents would be at liberty to verify

genuineness of claim(s) made by Petitioner.