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Blue Bird Pure Pvt. Ltd . v. Union Of India And Others

Delhi High Court

Jul 22, 2019

Judgment

CaseIQ

Smart Summary (Beta)

Factual and Procedural Background

The Petitioner, M/s Blue Bird Pure Pvt. Ltd., a company engaged in manufacturing and trading water purifiers with registration under the Central Excise Act, 1944, transitioned to registration under the Goods and Services Tax (GST) regime following the enactment of the CGST Act, 2017. The Petitioner filed the GST TRAN-1 Form online on 27th December 2017, which was a mandatory prerequisite to carry forward CENVAT credit available prior to GST implementation.

The Petitioner inadvertently entered the available stock of goods as on 30th June 2017 in the wrong column (7(d) instead of 7(a)) in the TRAN-1 Form. After the portal for TRAN-1 was locked post the due date, the Petitioner discovered this error only when the portal reopened for TRAN-2 filing on 15th March 2018, but was unable to revise the TRAN-1 Form.

Subsequently, the Petitioner made representations to the Single Point of Contact (SPOC) and other authorities seeking permission to rectify the error, but no relief was granted. Despite repeated requests and reminders, the Petitioner remained unable to correct the form, prompting the filing of the present writ petition.

Legal Issues Presented

Whether the Petitioner can be permitted to rectify an inadvertent error made in the GST TRAN-1 Form after the statutory deadline has passed and the portal has been locked?
Whether the Respondents are obliged to facilitate the correction of bona fide errors in the GST filing process either electronically or manually?
Whether penalty and interest for late filing of GSTR-3B returns should be waived in light of such rectification?

Arguments of the Parties

Petitioner's Arguments

The Petitioner committed an inadvertent error by entering stock quantity in the wrong column in the TRAN-1 Form, which prevented availing Central GST Credit.
The Petitioner filed the form within the prescribed deadline but could not rectify the error after the portal was locked.
Repeated representations were made to authorities seeking rectification permission, which went unheeded.
Reliance was placed on precedents where courts directed similar reliefs by allowing reopening of the portal or manual rectification.

Respondents' Arguments

The Respondents distinguished the present case from cited precedents, arguing that earlier cases involved system glitches preventing correction, whereas here the error was on the Petitioner’s part.
The Respondents noted the existence of an Information Technology Grievances Redressal Committee (ITGRC) for technical grievances but suggested the Petitioner’s case might not fall within its parameters.
No record showed that the Petitioner’s representations were placed before the ITGRC for consideration.

Table of Precedents Cited

Precedent	Rule or Principle Cited For	Application by the Court
Bhargava Motors v. Union of India (dated 13th May 2019)	Direction to reopen GST portal or accept manual rectification of TRAN-1 Form due to difficulties in claiming input tax credit.	The Court relied on this precedent to hold that the Petitioner’s difficulty is genuine and warrants similar relief, emphasizing the GST system is in a trial and error phase.
Kusum Enterprises Pvt. Ltd v. Union of India, 2019-TIOL-1509-HC-DEL-GST	Directions to permit electronic or manual correction of GST TRAN-1 Form in circumstances of genuine difficulty.	The Court referred to this precedent to reinforce the need for facilitating bona fide corrections and preventing undue hardship to taxpayers.
Tara Exports vs. Union of India (Madurai Bench, 10th September 2018)	Recognition of procedural difficulties in claiming input tax credit and directions to accept manual or electronic filing of TRAN-1 Form.	Cited within Bhargava Motors decision to illustrate judicial recognition of systemic challenges in GST filings.

Court's Reasoning and Analysis

The Court noted that although the Petitioner’s error in the TRAN-1 Form was inadvertent, it resulted in denial of entitled input tax credit. The Court observed that the GST system is still evolving and recognized similar difficulties faced by other taxpayers in prior cases. It rejected the Respondents’ attempt to distinguish the present case on the basis of error origin, emphasizing that the inability to rectify the form due to system lock-down is a substantive hardship.

The Court found the Respondents’ grievance redressal mechanisms ineffective in addressing the Petitioner’s concerns, as repeated representations were ignored and not considered by the ITGRC. The Court underscored the necessity for the Respondents to facilitate bona fide corrections either by reopening the portal or accepting manual filings.

Additionally, the Court recommended systemic improvements to the GST filing software to enable saving, reviewing, and printing of forms prior to submission, along with acknowledgement messages to minimize future errors.

Holding and Implications

The writ petition is disposed of with directions to the Respondents to either reopen the GST portal for electronic rectification of the TRAN-1 Form or accept a manually filed corrected TRAN-1 Form by 31st July 2019.

The Petitioner is permitted to subsequently file the TRAN-2 return and the penalty and interest for late filing of GSTR-3B returns shall be waived, subject to compliance with the Court’s directions. This decision directly benefits the Petitioner by enabling correction of a bona fide error and access to entitled input tax credit. No new precedent beyond the application of existing principles was established, but the Court emphasized the need for improved grievance redressal and system design to prevent similar issues.

Show all summary ...

W.P.(C) 3798/2019 Page 1 of 7

$~70 * IN THE HIGH COURT OF DELHI AT NEW DELHI

+ W.P.(C) 3798/2019

M/S BLUE BIRD PURE PVT. LTD. ..... Petitioner Through: Mrs. Anjali J. Manish and Mr. Priyadarshi Manish, Advocates versus

UNION OF INDIA & ORS. ..... Respondents

Through: Mr. Anil Dabas and Mr. Praveen Kumar, Advocates for Respondent

No. 1

Mr. Harpreet Singh, Senior Standing Counsel for Respondent Nos. 2 and 3 with Ms. Suhani Mathur, Advocate Mr. Satyakam, ASC, Govt. Of NCT

of Delhi/ Respondent Nos. 4 and 5

CORAM:

JUSTICE S.MURALIDHAR

JUSTICE TALWANT SINGH

O R D E R

% 22.07.2019 Dr. S. Muralidhar, J.:

1. Notice. Notice is accepted by learned counsel for the Respondents.

2. Counter-affidavit filed on behalf of Respondent Nos. 2 and 3 is already on record.

3. The Petitioner is a company having its registered office in New Delhi, engaged in the manufacturing and trading of water purifiers. It is duly

registered with the Excise Department and under the Central Excise Act, 1944 and the Rules under which it is entitled to take the CENVAT credit on input used for manufacturing of the finished goods. After the enactment of Central Goods and Services Act, 2017 (CGST Act), the Petitioner got itself registered with the Goods and Service Tax Department. A registration number was issued to it on 26^thSeptember, 2017.

4. The Central Government in exercise of the powers under Section 140(5) read with Section 164 of CGST Act read with Rule 117 of the CGST Rules prescribed the GST TRAN- 1 Form which was required to be filed online as a condition precedent for allowing the Petitioner to carry forward the CENVAT credit that was available to it as on the date of coming into force of the CGST Act. The Petitioner states that it filled and filed online the GST TRAN-1 Form on 27^thDecember, 2017. The specific averment is that it committed an inadvertent error in showing the available stock of goods as on 30^thJune, 2017 in column 7(d) of the Form instead of column 7(a) of the Form. It is stated that as a result of this error, the Petitioner has been unable to avail of the Central GST Credit in respect thereof.

5. It is further averred in the petition that after the due date for filing of the TRAN-1 Form was crossed, the system got locked down at the portal and no tax payer was able to view/mend their TRAN-1 forms. The portal opened up on 15^thMarch, 2018 for filing the TRAN- 2 Returns. It was at that stage that the Petitioner realised that it had committed an inadvertent error in the TRAN-1 Form. The system, however, did not permit the Petitioner to revise the TRAN-1 Form.

6. On 23^rdApril, 2018, the Petitioner addressed a representation to Officer, Single Point of Contact (SPOC) Delhi, GST-ITO (Respondent No. 5), admitting to having committed the abovementioned inadvertent error and seeking permission to rectify the mistake. The credit amount involved was Rs.20,34,807/-. It is pointed out that on account of inability to avail of the above credit amount, the Petitioner was not in a position to file the GSTR- 3B returns.

7. The Petitioner further states that on the said representation, the GSTO stated that it will be forwarded to the GST Council for further action. However, nothing happened. The Petitioner addressed further letters on 19^th September, 2018 to SPOC and 24^thSeptember, 2018 to the Commissioner, Delhi GST, but was not permitted to rectify the TRAN-1 Form already filed online. An e-mail was addressed to the GSTN Nodal Officer on 22^nd October, 2018 explaining the Petitioner's difficulty. After several reminders bore no results, the present petition was filed.

8. Learned counsel for the Petitioner has referred to the two decisions of this Court, namely, Bhargava Motors v. Union of India, decision dated 13^th May, 2019 in WP(C) 1280/2018 and Kusum Enterprises Pvt. Ltd v. Union of India, 2019-TIOL-1509-HC-DEL-GST, where in similar circumstances, the Court issued directions to the Respondents to either open the portal to enable the Petitioner to rectify the TRAN-1 Form electronically or permit the Petitioner to do it manually.

9. Learned counsel for Respondents sought to distinguish the applicability

of the above decisions on the ground that in those cases there was a glitch in the system which prevented those Petitioners from correcting the credit amount in the TRAN-1 Form, whereas in the present case the mistake was by the Petitioner in filling up the stock quantity in the wrong column.

10. Having carefully examined those decisions, the Court is unable to find any distinguishing feature that should deny the Petitioner a relief similar to the one granted in those cases. In those cases also, there was some error committed by the Petitioners which they were unable to rectify in the TRAN-1 Form and as a result of which, they could not file the returns in TRAN-2 Form and avail of the credit which they were entitled to. In both the said decisions, the Court noticed that GST system is still in the 'trial and error phase' insofar as its implementation is concerned. It was observed in

Bhargava Motors (supra) as under:

"10. The GST System is still in a 'trial and error phase' as far as its implementation is concerned. Ever since the date the GSTN became operational, this Court has been approached by dealers facing genuine difficulties in filing returns, claiming input tax credit through the GST portal. The Court's attention has been drawn to a decision of the Madurai Bench of the Madras High Court dated 10th September, 2018 in W.P. (MD) No. 18532/2018 ( Tara Exports vs. Union of India) where after acknowledging the procedural difficulties in claiming input tax credit in the TRAN-1 form that Court directed the respondents

"either to open the portal, so as to enable the petitioner to file the TRAN1 electronically for claiming the transitional credit or accept the manually filed TRAN1" and to allow the input credit claimed "after processing the same, if it is otherwise eligible in law".

11. In the present case also the Court is satisfied that the

Petitioner's difficulty in filling up a correct credit amount in the TRAN-1 form is a genuine one which should not preclude him from having its claim examined by the authorities in accordance with law. A direction is accordingly issued to the Respondents to either open the portal so as to enable the Petitioner to again file TRAN-1 electronically or to accept a manually filed TRAN-1 on or before 31st May, 2019. The Petitioner's claims will thereafter be processed in accordance with law.

12. With a view to ensure that in future such glitches can be overcome, the Court directs the Respondents to consider providing in the software itself a facility of the trader/dealer being able to save onto his/her system the filled up form and also a facility for reviewing the form that has been filled up before its submission. It should also permit the dealer to print out the filled up form which will contain the date/time of its submission online. The Respondents will also consider whether there can be a message that pops up by way of an acknowledgement that the Form with the credit claimed has been correctly uploaded.'

11. Similar directions were issued by this Court in Kusum Enterprises Pvt. Ltd.(supra).

12. In the present case, the Court is satisfied that, although the failure was on the part of the Petitioner to fill up the data concerning its stock in Column 7(d) of Form TRAN-1instead of Column 7(a), the error was inadvertent. The Respondents ought to have provided in the system itself a facility for rectification of such errors which are clearly bona fide. It should be noted at this stage that although the system provided for revision of a return, the deadline for making the revision coincided with the last date for filing the return i.e. 27^thDecember, 2017. Thus, such facility was rendered impractical

and meaningless.

13. The Court also notes with some concern that the representations repeatedly made by the Petitioner were not attended to by the Respondents which resulted in the Petitioner having to approach this Court for relief. The apprehension of the Respondents that orders of the kind in Bhargava Motors (supra) and Kusum Enterprises(supra) can open the 'flood gates' can easily be allayed by the Respondents themselves if they provide a robust Grievance Redressal Mechanism that can address such genuine grievances of the traders instead of compelling every trader to approach this Court for relief.

14. Mr. Harpreet Singh, learned counsel for the Respondents 2 and 3 informs the Court that there is in fact, an Information Technology Grievances Redressal Committee (ITGRC) to address the technical glitches encountered by the traders and to enable them to avail of the input tax and other credit which they are entitled to under the law. When enquired why the said ITGRC was unable to redress the Petitioner's complaint, Mr. Harpreet Singh speculated that the Petitioner's case perhaps did not fall within the 'parameters' for consideration of the grievance by the said ITGRC. There is nothing on record to suggest that the Petitioner's repeated representations were ever placed before the ITGRC for its consideration. Even the counter affidavit filed in the present case does not suggest so.

15. Accordingly, this Court directs the Respondents to either open the online portal so as to enable the Petitioner to again file the rectified TRAN-I

Form electronically or accept the manually filed TRAN-I Form with the correction on or before 31^stJuly, 2019.

16. The Petitioner will correspondingly be permitted to thereafter file the return in TRAN-2. The penalty and interest for the late filing of GSTR-3B will be waived off in view of the above directions, subject, of course, to the Petitioner being permitted to and in fact filing the rectified TRAN-1 Form as directed.

17. The writ petition is disposed of in the above terms.

18. A copy of this order be given dasti to the parties under the signatures of the Court Master.

S. MURALIDHAR, J.

TALWANT SINGH, J.

JULY 22, 2019