This particular decision is upheld by the High Court of Gujarat through the Division bench of JUSTICE J.B. PARDIWALA AND JUSTICE NISHA M. THAKORE in the case of Bodal Chemicals Ltd. v. Union of India (R/Special Civil Application No. 9151 of 2021).
The instant petition was filed in a matter related to furnishing of the GSTR – 6 return for recording and distributing the ISD credit. Writ applicant was a public limited company engaged in the business of manufacture of chemical products like H-Acid, Vinyl Sulphone, Dyes etc. It was not in dispute that the writ applicant was registered as the Input Service Distributor (ISD) under the Cenvat Credit Rules read with the Central Excise Rules.
Writ applicant was availing the credit of various input transactions as the ISD for distributing proportionate credit to each of the business premises in accordance with Rule 7 of the Cenvat Credit Rules.
The Central Goods and Services Act, 2017 along with the CGST Rules came into force with effect from 01-07-2017. The un-utilized credit lying in the credit register of the assessees was allowed to be transferred and carried forward to the electronic credit ledger under the CGST Act by filing a return in the Form STR – 3 detailing therein the un-utilized credit and other relevant information. A declaration in Form GST TRAN – 1 was also required to be filed by the registered person under the CGST Act by 27-12-2017.
In November, 2017, the writ applicant filed GST TRAN – 1 wherein the balance of the Cenvat Credit lying with the writ applicant on 30-06-2017 including the un-utilized balance of ISD Cenvat Credit was Rs.20,52,989/-. The writ applicant filed return in Form CGST – 06 with details of balance of Cenvat Credit lying on 30.06.2017 for transferring such credit to the GST regime. However, on account of an error in the GST network, the Cenvat Credit balance in the return was shown at Rs.2,96,528/-. The ISD balance of Rs.20,52,989/- was not added or included in the balance of the ISD credit in the return.
Court opined that respondents cannot raise their hands in despair saying that it was not possible to correct or take care of the technical glitches. The writ applicant was running from pillar to post requesting the respondents to provide a solution and take care of the technical error and glitch that occurred as regards furnishing the GSTR – 6 return for recording and distributing the ISD credit of Rs.20,52,989/-. As usual, there was no response at the end of the GSTN. The writ applicant was not allowed to distribute the ISD credit of Rs.20,52,989/- as the same was not recorded, reported and declared in the GSTR – 6 return.
Credit was a tax paid by the registered person on input transactions and such tax already paid to the credit of the Central Government was a vested right of the person. Such vested right cannot be defeated on account of any irregularity in the system evolved by the Government.
The petition was allowed and respondents were directed to allow the writ applicant to furnish manually the GSTR – 6 return with details of the ISD credit of Rs.20,52,989/- and also permit distribution of such credit to the constituents of the writ applicant.
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Judgement reviewed by – Arvind Roshan