The Gujarat High Court has issued notices to the Centre and the GST council on a petition challenging the constitutional validity and vires of Rule 117 of the Central Goods and Services Tax Rules-2017 on the ground that it restricts the time limit for filing and revising of GST TRAN-1 to the extent of only 180 days from the appointed day even though there is no such limitation under Section 140(5) of the Central GST Act which provides for both substantive as well as procedural conditions to avail of Cenvat credit of goods and services in transit on the appointed day.
A bench of Justice MMR Shah and Justice AY Kogje issued the notices on a petition filed by M/s Jay Chemical Ltd challenging the constitutional validity and vires of Rule 117 of the Central Goods and Services Tax Rules, 2017 and Form GST TRAN-1 issued in relation thereto vis-à-vis Section 140(5) and Section 164 of the Central Goods and Services Tax Act, 2017.
Petitioner’s counsel Vinay Shraff, Vishal J Dave, Nipun Singhvi and Hiral Dave submitted before the court that the rule under challenge is not just restrictive in time, but also does not allow opportunity to rectify errors and omission while filing GST TRAN-1 even though analogous Section 39(9) allows rectification of any omission or incorrect particulars in any return filed under the Central GST Act until September or second quarter following the end of the financial year, or the actual date of furnishing of relevant annual return, whichever is earlier.
“The provision of Rule 117 of the Central Rules is ultra vires of the Central GST Act to the extent that it provides for filing of Form GST TRAN-1 within 90 days which could be extended by a further period of 90 days as a condition precedent for carry forward of credit of eligible duties even though there is no such requirement of time limit under Section 140 of the Central GST Act.
“Therefore, it is arbitrary and unreasonable to not allow rectification of any omission or incorrect particulars in a statement to be filed under Section 140(5) of the Central GST Act even though the same is allowed in respect to other returns to be filed. There is no reasonable rationale in discriminating between a transitional return and other returns to be filed under the Act and therefore Rule 117 to that extent violates the mandate of Articles 14 and 19(1)(g) of the Constitution of India,” they said.
The petition came to be filed after the petitioner failed to claim credit with respect to certain eligible duties and discovered the error only past 180 days.